How crypto firms are taking advantage of MiCA’s patchy roll-out

Stablecoin laws have already gone live, but EU countries are scrambling to comply with the rest of the bloc’s new crypto rulebook ahead of deadlines.

The EU’s landmark framework requires that crypto firms like exchanges pick a country in which to apply for a licence. In practice, countries will inevitably have different levels of strictness.

The Markets in Crypto-Assets regulation was designed to introduce a level field across the EU, as national regulators will need to stick to the same set of standards. Once licensed, the crypto asset service providers, or CASPs, can passport their services anywhere in the bloc.

Also, countries are allowed to opt for longer transition periods before enforcing MiCA’s rules. This is known as a grandfathering period.

‘All this may call into question the level of compliance in certain countries.’

—  Ernest Lima, XReg Consulting

That creates opportunities for crypto firms to shop around for jurisdictions with lighter rules and less policing capacity, Ernest Lima, a partner at consultancy XReg, told DL News.

“Crypto firms registered or authorised in different EU member states may be subject to different requirements” between January 2025 and July 2026, Lima said.

Due to time and capacity constraints, some local regulators may find it difficult to review applications in time for the deadline, he added.

“Some may not even be well-resourced enough to adequately supervise authorised CASPs,” Lima said.

“All this may call into question the level of compliance in certain countries.”

Firms are already taking advantage of the patchy way in which the MiCA regulations are rolling out across the EU, in a practice known as regulatory arbitrage, Lima said.

Just the beginning

MiCA’s stablecoin laws went live on July 1, marking the beginning of the rollout.

The next phase is MiCA’s licensing regime for crypto businesses — including exchanges, custodians, and investment companies — which will go live on December 30.

While the new rules will be tougher, CASPs registered in one country are allowed to offer their services across the EU27 under MiCA’s “passporting” provisions.

Some countries with easier registration requirements already have a significant number of VASPs on their registers.

Lima said he expects to see the number of CASPs in Europe consolidate significantly, and especially in those countries.

In countries with lighter touch regulators, firms can use a relatively easy registration process as a way of gaining access to Europe.

Lithuania, for instance, has 588 VASPs, compared to Germany with 12, according to recent data from VASPnet.

Transition period

MiCA’s grandfathering period will also affect where firms apply for licences, Lima said.

The grandfathering period is a transition starting December 30, during which companies can transition to the stricter CASP regime.

Countries can give crypto firms up to an additional 18 months from December 30, though the EU securities markets watchdog recommends a 12-month grandfathering period.

In weighing how long to give firms to transition to the CASP regime, countries will have considered “how internally prepared they are to process applications, the gap between MiCA and their existing regime, and the number of firms currently registered in their jurisdictions — all factors that influence the workload associated with the transition,” Lima said.

Some countries have announced their transitions, while others have not, he added.

Among those that have announced:

• France will allow an 18-month ramp-up period. The country already has a MiCA-like regime in place.
• Many countries — including Ireland, Germany, Spain, and Austria — are opting for the recommended 12-month transition.
• Lithuania — which has light-touch anti-money laundering requirements and a large number of registered VASPs — has gone for five months.
• The Netherlands will apply the MiCA regime on 30 December, and is already accepting applications.

Strategies

Crypto businesses are considering different strategies to take advantage of the uneven rollout, Lima said.

Some firms are looking to become compliant as soon as possible — by December 30 — which means they’ll be first to the post in passporting rights and grabbing EU market share.

“Others are opting to progress multiple applications in EU jurisdictions,” he said.

That approach allows a firm to benefit from a transition period in a reputable jurisdiction while they work on a MiCA application.

Still, time is running out, he said — local regulators are gearing up to start the MiCA application process.

“Soon, there will no longer be time to process new applicants.”

Some businesses don’t intend to ever become MiCA compliant, Lima said.

They are choosing instead to run for as long as they can before winding down operations.

Reach out to the author at joanna@dlnews.com.