Article reprinted from: Yuliya
Original text: Cryptonews
Translation by: Yuliya, PANews
As 2025 approaches, the European cryptocurrency market is set to undergo significant changes. While global attention often focuses on developments in the U.S. market, the evolution of the European market over the next year is also worthy of close attention. Especially with the highly anticipated Markets in Crypto-Assets (MiCA) regulation set to be fully implemented across the EU on December 30, 2024, the market landscape will undergo substantial changes. The introduction of this regulation has already had a significant impact on the stablecoin market, particularly with recent skepticism surrounding USDT. In response, Tether's CEO has shared multiple clarifications on social 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 encourage EU member states to compete to become the most attractive business and investment destination. She pointed out:
"Jurisdictions that can efficiently adopt MiCA (EU Regulation on Markets in Crypto-Assets) and provide a business-friendly environment are expected to become important cryptocurrency hubs, with Germany and France being strong contenders. Meanwhile, countries like Estonia, Malta, or Portugal may leverage their flexible regulatory processes and competitive tax policies to attract global participants."
Markezic explained that MiCA provides a unified regulatory framework that allows businesses to operate throughout the trading area once they obtain regulatory approval in one member state through a "passporting" system. EUCI expects that by 2025, Europe will have formed a "more mature and regulated cryptocurrency market," providing legal certainty and confidence for both 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 still maintain a cautious attitude."
Erald Ghoos, General Manager of OKX Europe, believes that 2025 will be a pivotal year for the transformation of the cryptocurrency industry, especially in Europe.
"The recent historical high of Bitcoin is a strong indicator of the growing trust and attention towards digital assets. This surge, combined with the upcoming implementation of MiCA regulations in Europe, marks a crucial moment for the industry, providing 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 from EUCI expects that the regulation may cause "considerable confusion" during its implementation. She noted that the 27 EU member states may interpret the regulations differently, leading to challenges in regulatory consistency.
"There is also significant uncertainty in determining which projects and assets fall under MiCA regulation, especially regarding which can be considered 'fully decentralized'. Additionally, there is no consensus on the definition of NFTs within the industry, which has led to ambiguity regarding whether some tokens are subject to MiCA regulation."
Markezic stated that it is important for the new regulations to 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. Moreover, EUCI predicts that many tokens may be delisted from centralized platforms due to failure to meet regulatory standards. This change could lead to a reduction in 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 consolidation of the EU crypto market, driving merger and acquisition activities between traditional finance and crypto-native enterprises, while possibly leading to some companies or products exiting the market. Although MiCA largely excludes DeFi from direct regulation, its interfaces or service access points may face additional regulation from member states, which could trigger friction due to this uncertainty.
European Bitcoin Strategic Reserves
EU parliament member Sarah Knafo recently proposed establishing 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 stated that this idea is innovative but quite controversial in the EU's conservative financial environment. She believes that this proposal needs thorough discussion, focusing on analyzing its potential benefits and risks, especially regarding the strategic importance of Bitcoin and other crypto assets and the EU's positioning in global competition.
The MiCA regulation launched by the EU was once seen as a key to attracting crypto businesses, especially in the context of the U.S. Securities and Exchange Commission's regulatory enforcement. However, with Trump about to return to the White House and promising a more lenient environment for the crypto industry, the EU's attractiveness may be affected.
