MiCA: The silver bullet to make the EU a global crypto leader?
By
Samantha Jimenez
-
September 25, 2024
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During the European Blockchain Convention, one of the most anticipated panels was titled “Will MiCA be the silver bullet to make the EU a global crypto leader?”. In this panel, industry experts discussed whether the European Union’s Markets in Crypto-Assets Regulation (MiCA) could be the push needed for the region to take the global lead in the cryptocurrency space.
This regulatory framework has the potential to provide a clear and secure structure, but also faces challenges regarding its implementation and effectiveness.
The panel featured Philipp Bohrn, Vice President of Regulatory Compliance and Public Affairs at Bitpanda; Eric Viohl, Managing Director at Crypto Finance (Deutschland) GMBH; Marina Villalonga Cladera, Partner at Asensi Abogados; Ana Carolina Oliveira, Chief Compliance Officer at Venga; and Sudhu Arumugam, Chief Product Officer at M2. Moderation was provided by Gillian Lynch, CEO of Gemini in Europe.
A crucial regulatory context within the European Union
Europe has shown increasing interest in regulating cryptocurrencies, not only to avoid the risks associated with fraud and market volatility, but also to establish an environment conducive to innovation. MiCA has been described as a key initiative to provide regulatory clarity and protect consumers, all while fostering the growth of the crypto industry.
“This is a historic moment,” Philipp Bohrn stressed. “MiCA represents the first comprehensive global regulatory framework for cryptoassets. The importance of this should not be underestimated, because it gives us a clear and common set of rules that every European country will have to follow.”
Despite this optimism, the implementation and effectiveness of MiCA raises some concerns regarding its scope and application.
A "silver bullet" or a partial solution for the European Union
During the debate, one of the recurring themes was whether MiCA can really live up to the high expectations that are being set. The idea of the EU becoming a global leader in the crypto sector depends on how this regulation can facilitate growth while avoiding stifling innovation.
“It is encouraging to see the EU taking the lead in regulating the crypto space,” Eric Viohl said. “However, we should not be too optimistic. These types of regulations tend to focus on risks, and there are fears that bureaucracy could hinder the widespread adoption of blockchain technology.”
Ana Carolina Oliveira, for her part, took a more balanced approach, highlighting the importance of flexible and evolving regulation. “MiCA is a great step forward, but success will depend on the ability of regulators to adapt to the pace of technological change. If regulation is too strict or does not evolve along with the industry, it could hinder innovation.”
Along these lines, Marina Villalonga Cladera, with her experience in law, added that one of the challenges will be to ensure that MiCA remains balanced: “Regulators must find the right balance between consumer protection and not inhibiting innovation. While we are excited to have a strong regulation, it is essential that innovation continues to be encouraged, especially in startups and smaller projects that might not have the capacity to comply with the strictest rules.”
Challenges to consider
A critical challenge discussed was the implementation of MiCA in a uniform manner across the EU. Sudhu Arumugam highlighted the disparity in the readiness of different countries to adopt the new rules: “Some countries, such as Germany and France, are already quite advanced in their efforts to integrate cryptocurrencies into their financial systems. Others, however, still have a long way to go. MiCA needs to be implemented consistently across the region if the EU is to compete with jurisdictions such as the US or Asia.”
The scope of regulation was also discussed. While it covers a wide range of crypto assets, from stablecoins to crypto service providers, several panelists agreed that there are areas that may not be sufficiently covered, such as decentralized finance (DeFi).
“Regulation is largely focused on centralized entities, but the future of finance may increasingly move towards the decentralized,” said panel moderator Gillian Lynch. “This raises the question of how regulators will manage innovations that don’t align as easily with traditional models.”
What does this mean for innovation?
The impact of MiCA on innovation was another flashpoint of the debate. Panellists highlighted that while the regulation provides clarity, it could also represent a barrier for smaller innovators.
Philipp Bohrn noted that well-established companies, such as Bitpanda, are well positioned to adapt to new regulations, but it could be more complicated for startups or smaller companies. “The cost of compliance can be prohibitive for many startups,” he warned. “This is an issue that regulators need to consider if they really want Europe to be a global leader in crypto. We need an environment that not only protects consumers, but also supports the growth of startups.”
However, there was consensus that MiCA could attract more investors to the European crypto space, by providing a clear regulatory framework. Eric Viohl noted that the regulatory clarity brought by MiCA could be a catalyst for attracting institutional capital: “Institutional investors have been reluctant to get involved in cryptocurrencies due to the lack of regulatory clarity. Now, with a robust framework like MiCA, we could see an increase in investment in this space.”
«MiCA is just the beginning»
The debate over whether MiCA will be the “silver bullet” that propels the European Union towards global leadership in cryptocurrencies leaves open questions. The panelists agree that it is a great step forward, but with challenges to overcome. The key will be how the EU implements and adapts these regulations, maintaining a balance between consumer protection and fostering innovation.
As Gillian Lynch highlighted in closing the panel, “MiCA is just the beginning. If we really want Europe to lead in crypto, we need to keep working on policies that not only address the risks, but also promote growth and innovation.”
