Europe’s cryptocurrency regulatory landscape is facing increased scrutiny as policymakers deliberate whether the enforcement of the Markets in Crypto-Assets (MiCA) regulation should be retained by national authorities or centralized under the European Securities and Markets Authority (ESMA).
MiCA, which is set to largely take effect at the start of 2025, aims to establish a cohesive rulebook for crypto-asset service providers throughout the European Union.
As implementation advances, the growing discrepancies between member states are becoming increasingly evident. Some regulators have issued numerous licenses, whereas others have granted only a few, raising concerns regarding uneven supervision and potential regulatory arbitrage.
This week, Cointelegraph’s Byte-Sized Insight discussed the implications of these challenges for Europe’s crypto market with Lewin Boehnke, chief strategy officer at Crypto Finance Group, a Switzerland-based digital asset firm operating across the EU.
Uneven enforcement fuels calls for oversight
Boehnke argues that the primary issue facing Europe is not the MiCA framework itself, but rather its inconsistent application across various jurisdictions.
“There is a very, very uneven application of the regulation,” he noted, highlighting the stark contrasts among member states. For instance, Germany has granted approximately 30 crypto licenses to many established banks, while Luxembourg has approved only three, all issued to major, well-known firms.
The ESMA’s peer review of the Malta Financial Services Authority’s authorization of a crypto service provider revealed that the regulator only “partially met expectations.”
These disparities have led to increased support among certain regulators and policymakers for transferring supervisory authority to ESMA, which would establish a more centralized enforcement model akin to that of the US Securities and Exchange Commission.
Related: Italy sets hard MiCA deadline for crypto platforms to comply
France, Austria, and Italy have all expressed support for such a shift, especially amidst criticisms of more lenient regulatory approaches in other parts of the bloc.
From Boehnke’s viewpoint, centralization might signify greater efficiency rather than control.
“From just purely the practical point of view, I think it would be a good idea to have a unified… application of the regulation,” he said, explaining that direct engagement with ESMA could minimize delays caused by the back-and-forth among national authorities.
MiCA’s design praised, but technical questions remain
Even though some segments of the crypto industry criticize MiCA, Boehnke asserted that the regulation’s fundamental structure is robust, particularly its emphasis on regulating intermediaries rather than peer-to-peer transactions.
“I do like MiCA regulation… the overarching approach of regulating not necessarily the assets, not the peer-to-peer use, but the custodians and the ones that offer services… that is the right approach.”
Nonetheless, he mentioned that unresolved technical issues are hindering adoption, particularly among banks. One example is MiCA’s requirement for custodians to return client assets “immediately,” a term that remains ambiguous.
“Does that mean withdrawal of the crypto? Or is it good enough to sell the crypto and withdraw the fiat immediately?” Boehnke queried, indicating that these uncertainties are still being clarified and await guidance from ESMA.
To hear the full conversation on Byte-Sized Insight, listen to the complete episode on Cointelegraph’s Podcasts page, Apple Podcasts or Spotify. And don’t forget to check out Cointelegraph’s full lineup of other shows!
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