Original text: Cryptonews
Compiled by: Yuliya, PANews
As 2025 approaches, the European cryptocurrency market is about to undergo significant changes. While global attention often focuses on developments in the U.S. market, the trends in the European market over the next year are also worthy of close attention. Particularly with the highly anticipated Markets in Crypto-Assets regulation (MiCA) set to be fully implemented across the EU on December 30, 2024, the market landscape will undergo significant changes. The introduction of this regulation has already had a major impact on the stablecoin market, especially with recent questioning regarding USDT in the market. In response, Tether's CEO shared multiple clarifications on social media platform X, emphasizing that the reality is that USDT will not be deemed illegal in Europe.
Significant changes will occur in the future
Marina Markezic, co-founder of the European Crypto Initiative (EUCI), stated that the implementation of MiCA will prompt EU member states to compete to become the most attractive business and investment destination. She noted:
"Jurisdictions that can efficiently adopt MiCA (EU Regulation on Markets in Crypto-Assets) and provide a business-friendly environment are likely to become important cryptocurrency hubs, with Germany and France being strong contenders. At the same time, countries like Estonia, Malta, or Portugal may also leverage their flexible regulatory processes and competitive tax policies to attract global participants."
Markezic explained that MiCA provides a unified regulatory framework, allowing businesses to operate across the trading area once they obtain regulatory approval in one member state through a 'license passport' system. EUCI expects that by 2025, Europe will form a 'more mature and regulated cryptocurrency market' that provides legal certainty and confidence for institutional and retail investors while promoting the adoption of blockchain technology.
"Due to the rise in the cryptocurrency market, retail participation has recently increased. The approval of ETFs and the change in the U.S. government have brought optimism to investors. Nevertheless, considering the historical volatility of the market, we believe that most retail cryptocurrency investors remain cautious."
Erald Ghoos, General Manager of OKX Europe, believes that 2025 will be a key year for the transformation of the cryptocurrency industry, especially in Europe.
"The recent historic high of Bitcoin is a strong indicator of the growing trust and attention towards digital assets. This surge, combined with the upcoming implementation of the MiCA regulatory framework in Europe, marks a critical moment for the industry, bringing a much-needed framework that promises greater clarity, security, and stability."
Challenges of MiCA
Although MiCA is seen as a step in the right direction, Marina Markezic of EUCI expects that the regulation may cause 'quite a bit of chaos' during its implementation. She pointed out that due to potential differences in interpretation of the regulation among the 27 EU member states, regulatory consistency will face challenges.
"There is considerable uncertainty in determining which projects and assets fall under the scope of MiCA regulation, especially regarding what can be considered 'fully decentralized.' Additionally, there is no consensus within the industry on the definition of NFTs, which also creates ambiguity about whether certain tokens are subject to MiCA regulation."
Markezic stated that it is important; the new regulations require projects to prepare a white paper before publicly issuing tokens, which may increase compliance difficulties for small projects and emerging plans, thereby stifling innovation. Additionally, EUCI predicts that a significant number of tokens may be delisted from centralized platforms due to failure to meet regulatory standards. This change could reduce the variety of stablecoins available to retail investors on exchanges, subsequently affecting market liquidity and accessibility.
Furthermore, she predicts that MiCA may accelerate the institutionalization and integration of the EU crypto market, driving mergers and acquisitions between traditional finance and crypto-native enterprises, while also potentially causing some companies or products to exit the market. Although MiCA largely excludes DeFi from direct regulatory oversight, its interfaces or service access points may face additional regulation from member states, and this uncertainty could cause friction. (Related reading)
Bitcoin's Strategic Reserves in Europe
EU lawmaker Sarah Knafo recently proposed the establishment of a Bitcoin strategic reserve in Brussels, stating that this move could emulate Trump's policies and warning that the launch of a digital euro could lead to a 'dystopian world.' Markezic noted that this idea is innovative but quite controversial in the conservative financial environment of the EU. She believes this proposal needs comprehensive discussion, focusing on its potential benefits and risks, particularly regarding the strategic importance of Bitcoin and other crypto assets, as well as the EU's positioning in global competition.
The MiCA regulation launched by the EU was once seen as key to attracting crypto businesses, especially against the backdrop of the U.S. Securities and Exchange Commission's enforcement-based regulation. However, with Trump set to return to the White House and promising a more lenient environment for the crypto industry, the EU's appeal may be affected.
