Article reprinted from: Yuliya
Original Source: Cryptonews
Translation: Yuliya, PANews
With the arrival of 2025, the European cryptocurrency market is set to undergo significant changes. While global attention often focuses on developments in the U.S. market, the trends in the European market in the coming year also warrant 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 questioning surrounding USDT. In response, Tether's CEO shared multiple clarifications on social platform X, emphasizing that the reality is USDT will not be deemed illegal in Europe.
Significant changes will occur in the future
European Crypto Initiative (EUCI) co-founder Marina Markezic 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 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 that allows businesses to operate across the trade area once they obtain regulatory approval in one member state through a "license pass" system. EUCI anticipates that by 2025, Europe will develop 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 investors in cryptocurrencies remain cautious."
OKX Europe General Manager Erald Ghoos believes that 2025 will be a key year for the transformation of the cryptocurrency industry, especially in Europe.
"The recent all-time high of Bitcoin is a strong indicator of the growing trust and attention towards digital assets. This surge, coupled with the impending implementation of MiCA regulatory framework in Europe, marks a critical moment for the industry, bringing much-needed clarity, security, and stability."
Challenges of MiCA
Although MiCA is seen as a step in the right direction, EUCI's Marina Markezic expects that the regulation may cause "considerable confusion" during its implementation. She pointed out that the 27 EU member states might have differing interpretations of the regulation, leading to challenges in regulatory consistency.
"There is also considerable uncertainty in determining which projects and assets fall under MiCA regulation, especially regarding the controversy over what can be considered 'fully decentralized.' Additionally, there is no consensus on the definition of NFTs within the industry, leading to ambiguity about whether certain tokens are subject to MiCA regulation."
Markezic stated that it is important that the new regulations require projects to prepare a white paper before public token issuance, which could increase compliance difficulties for small projects and emerging plans, thereby stifling innovation. Furthermore, EUCI predicts that due to an inability to meet regulatory standards, a large number of tokens may be delisted from centralized platforms. This change could result in a reduced variety of stablecoins available to retail investors on exchanges, thus impacting market liquidity and accessibility.
Additionally, 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 companies, while potentially leading to some companies or products exiting the market. Although MiCA largely excludes DeFi from direct regulatory oversight, its interfaces or service access points may face additional regulation from member states, creating uncertainty that could lead to friction. (Related reading)
Europe's Bitcoin strategic reserves
EU Member Sarah Knafo recently proposed establishing Bitcoin strategic reserves in Brussels, suggesting that this move could emulate Trump's policies, warning that the launch of the digital euro could lead to a "dystopian world." Markezic stated that this idea is innovative but controversial in the EU's conservative financial environment. She believes this proposal requires 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 key to attracting crypto businesses, especially against the backdrop of the U.S. Securities and Exchange Commission's regulatory enforcement. However, with Trump set to return to the White House and promising a looser environment for the crypto industry, the EU's attractiveness may be affected.
