Europe’s MiCA rollout sparks debate over who wins under new crypto rules

Borg, however, said the biggest challenge is no longer the law itself but how regulators are applying it. He estimates Europe could go from roughly 3,000 registered crypto asset service providers to only 300 or 400 licensed firms under MiCA — which he indicated would suit the regulators just fine

“I’m noticing that regulators are becoming more and more lazy,” Borg said. “They prefer having 20 operators to regulate rather than invest in more technology and more human resources to supervise more operators.”

Borg believes the growing cost of compliance is biased toward companies that can afford bigger legal and compliance teams. While MiCA itself does not intentionally favor large firms over smaller ones, he said the technical standards and supervisory expectations introduced alongside the regulation have made it harder for startups to compete.

Not everyone agrees. Alex Fazel, chief partnership officer at SwissBorg, said obtaining a MiCA license is less about company size than proving how a business operates.

“Transparency is key,” Fazel said. “You cannot build trust without transparency.”

SwissBorg received its MiCA license through France’s financial markets regulator this year. Fazel said the licensing process required the company to document its governance, compliance procedures and operations in detail.

“A MiCA license is not something you can buy because you have money and power,” he said. “It is making sure every process is fully transparent.”

Still, Fazel acknowledged the new rules will be hardest on startups because obtaining and maintaining a license requires significant capital.

“If there’s one segment I feel bad for, it’s startups,” he said. “Innovation may suffer for companies that don’t have enough capital.”

For licensed exchanges, another question remains: whether regulators can enforce the new rules against firms operating outside the European Union.

Lin Han, founder and CEO of Gate Group, said licensed exchanges have spent years preparing for MiCA, but the framework only works if everyone follows it.

“Everybody needs to follow the rule,” Han said. “Then we can compete on better service for users.”

The European Securities and Markets Authority (ESMA) has said firms serving EU clients without MiCA authorization are breaching EU law and should stop offering those services. It has also warned firms not to rely on “reverse solicitation” to continue serving European customers and has encouraged measures such as geo-blocking to prevent access.

Han questioned whether regulators have the resources to prevent unlicensed platforms from continuing to operate from overseas.

“If unregulated or unregistered platforms can still provide services, then it’s not a level playing field,” he said.

Despite their disagreements, all three agreed on one point: crypto regulation in Europe is here to stay. Borg said MiCA has helped banks become more willing to work with crypto companies. Han said Europe remains too important a market for global exchanges to ignore despite the higher compliance costs. Fazel said stronger oversight should improve consumer protections by giving customers greater legal recourse if a licensed firm fails. He also said it brings market stability.

“I really see regulators as a net positive for the industry,” Fazel said. “They’re here to verify.” For Borg, MiCA having come into full force means “crypto made it. Today, it is very difficult to try to ban crypto. It is very difficult to try to kill crypto because it has become too big to fail.”