What impact will the European MiCA legislation have on the market?

As 2025 approaches, the European cryptocurrency market will undergo significant changes, particularly with the full implementation of the Markets in Crypto-Assets Regulation (MiCA) by the end of 2024 in the EU. This legislation has already impacted the stablecoin market, with concerns about the legality of USDT but clarifications provided. MiCA will encourage EU member states to compete to become cryptocurrency hubs, offering a business-friendly environment. At the same time, it provides companies with a 'license passport' to operate across the EU. Although MiCA is seen as a positive development, its implementation may cause chaos due to differences in interpretation among member states and challenges in regulatory consistency. Additionally, smaller projects and emerging plans may face compliance difficulties, resulting in some tokens being delisted, which could affect market liquidity and retail options. MiCA may also accelerate market institutionalization and consolidation, driving merger and acquisition activity, but it may also lead to the exit of certain companies or products.

EU lawmaker Sarah Knafo has proposed establishing a Bitcoin strategic reserve, emulating Trump's policies, and is concerned that the digital euro may have adverse effects. Markezic believes this idea is innovative but highly controversial, requiring a comprehensive assessment of potential benefits and risks, especially regarding the strategic importance of crypto assets and the EU's global competitive position. Furthermore, Trump's return to the White House and his promise to ease crypto regulation may affect the EU's attractiveness to crypto businesses, even though the MiCA regulations were previously seen as a key advantage.