Key takeaways:
- MiCA costs may eliminate even licensed companies: growing expenses on regulatory compliance systems mean that some entities will not survive on the market – warns the expert.
- Europe may be losing innovative projects: startups and new cryptocurrency projects may move outside the EU in search of more lenient regulations.
- The market is shrinking, but it is strengthening leaders: fewer companies mean greater concentration and opportunities for those that will survive and gain customers.
Giovanni Cunti of Gate Europe says some MiCA-licensed cryptocurrency companies may have difficulty staying in business. All because of the costs generated by the new regulatory order.
MiCA is and will continue to change the EU market
I think that many more companies that obtain a MiCA license will not be able to pay the costs (…) necessary to run this business in the long term
– said Cunti.
It also notes that MiCA’s stricter regulatory requirements will force some cryptocurrency startups and projects to relocate outside Europe. Although the regulations have strengthened investor protection, they affect innovation, which means that companies with interesting ideas will register outside the EU.
We may need to prepare for the fact that some projects, perhaps some important ones, may consider other jurisdictions with different guidelines
– he said.
New companies from MiCA
In the background, the number of companies that have a MiCA license continues to grow, but at a slightly slower pace than before. On Friday, July 17, the European Securities and Markets Authority (ESMA) added 14 CASP companies (i.e. cryptocurrency operators) to its register, increasing their total number to 294. Previously, it added 37 companies to its database – as part of the first ESMA update, which took place after July 1, i.e. after the end of the transition period.
Cunti also pointed to the advantages of what is happening: greater regulatory burdens are changing the European market, but the “shrunk” market also creates opportunities for the remaining service providers.
There was a market with thousands of operators, and now there is a market with just hundreds
– said Cunti.
This is definitely a huge opportunity for all of us. Migration is ongoing because customers do not want to lose access to this market
– he added.
Security in exchange for lack of innovation?
The conclusions from the current situation around MiCA are clear: although these regulations increase market security and organize its structure, they also raise the entry threshold and operating costs to a level that may prove prohibitive even for licensed companies. As a result, Europe risks an outflow of innovative projects to more liberal jurisdictions, which may weaken its competitiveness in the global technology race. At the same time, however, there is a process of consolidation – the market is shrinking, but it is strengthening the largest and best-prepared players who can take over customers and build a stronger, more stable position in the new, regulated ecosystem.
