MiCA 2.0？EU paves the way for stricter crypto regulations

EU MiCA review: From technical tinkering to reshaping the crypto market landscape

The European Commission's MiCA review is moving beyond technical cleanup and into key issues that may reshape the EU crypto market landscape. As the response deadline is extended to September 30, debate has increasingly focused on where Europe's regulatory boundaries should extend and whether stricter rules will push market activity into jurisdictions that regulate faster.

Core Points

The first implementation phase of MiCA exposed some vulnerabilities that cannot be addressed through guidelines alone.

The debate over stablecoins is turning into issues of market access, currency influence, and competition with U.S. regulations.

Including pledges, loans or DeFi in the EU's stricter regulatory framework could reduce legal uncertainty, but it would also increase compliance costs.

Tokenization is making traditional boundaries between crypto, banking, securities and payments increasingly difficult to maintain.

The results of the review will determine whether Europe expands the scope of MiCA or relies on existing financial rules to absorb the next wave of digital assets.

Focus of debate: What to do after MiCA

On May 20, the European Commission launched a targeted MiCA review consultation. The response deadline has been extended from the original August 31 to September 30.

MiCA Article 140 requires Brussels to report on the operation of the regulation to the European Parliament and the Council by June 30, 2027. If evidence suggests that changes are needed, legislative proposals may be attached to the report.

"MiCA 2.0" is not the official name of the process, but has become synonymous with the controversy surrounding the review: Does Europe need targeted revisions or does it need a more comprehensive package that includes markets and services that are not covered or only partially covered by MiCA?

The timing of this review gives policymakers something they did not have when they originally formulated the framework: experience in the actual operation of MiCA. The maximum grandfather clause period for existing crypto asset service providers expired on July 1, although member states can shorten the period. Licensing, compliance and market experience can now be used to assess how these rules work in practice.

Comparison of regulatory scope: MiCA and emerging frameworks

How current EU rules and changing global standards deal with key digital asset areas.

Areas/Activities| Current MiCA processing method| Key Review/Global Pressure Points

Global stablecoin| Strict issuer reserve and redemption rules; non-compliant tokens (such as USDT) are prohibited. | Cross-border multi-issuer risk and equivalent competition from the US GENIUS Act.

DeFi protocol| Due to the lack of identifiable traditional issuers/intermediaries, they are largely excluded. | Consulate and discuss whether a decentralized structure should be included.

Pledge and Loan| Partial coverage (most pledges are limited to cases directly related to custody services). | Review and assess whether special provisions should be developed to coordinate cross-border revenue products.

NFT and Collectibles| Exempted if truly unique and non-interchangeable (although large series can be reclassified). | Reassess platform/service provider obligations surrounding the digital art market.

Tokenized Finance| Dispersed among bank deposits, traditional securities rules and electronic currency tokens. | The boundaries between payment tracks, securities and on-chain infrastructure are blurred.

Global stablecoins: The first major pressure point for MiCA

MiCA has changed the types of stablecoins that European customers can trade.

The European Securities and Markets Authority notified national regulators in early 2025 to ensure that crypto asset service providers stop providing certain services involving non-compliant asset reference tokens and electronic currency tokens. Kraken subsequently removed trading in USDT and several other stablecoins for EEA customers.

Cross-border issuance now brings more thorny issues. Global stablecoins may involve an EU-regulated issuer and an issuer outside the group, with interchangeable tokens circulating in two markets. To token holders, these assets may seem the same, but behind them are different companies, reserve pools, and legal jurisdictions.

During periods of mass redemption, this distinction becomes important. If holders outside Europe are able to effectively redeem from EU issuers and portions of the broader reserve pool remain outside EU control, liquidity pressures generated elsewhere could spread to EU entities.

The European Systemic Risk Committee has issued warnings about multi-issuer structures, including reserve availability, regulatory arbitrage and cross-border redemption risks.

One option in the discussion is an equivalence regime. Eligible third-country issuers can enter the European market if they meet conditions such as reserves, redemption rights and regulatory cooperation.

The United States is developing its own equivalent approach, which provides a living contrast for Europe as it considers its next move.

GENIUS Act: stablecoins become the focus of a greater geopolitical game

The United States promulgated the GENIUS Act on July 18, 2025, opening the way for foreign stablecoin issuers who can meet U.S. regulatory requirements.

Under the final version of the GENIUS Act, foreign issuers can enter the U.S. market if their home country regulatory system is considered equivalent to the U.S. framework and meet additional U.S. conditions. These conditions include registration with the Office of the Comptroller of the Currency and (unless the reciprocity arrangement provides otherwise) sufficient reserves deposited with U.S. financial institutions to meet the liquidity needs of U.S. customers.

Starting from July 18, 2028, these requirements will become particularly important. The U.S. Treasury Department's implementation notice explains that digital asset service providers are generally not allowed to provide stablecoins to U.S. customers unless the stablecoins are from an approved U.S. issuer or a qualified foreign issuer.

Its economic goals go beyond market supervision. When the GENIUS bill was signed, U.S. Treasury Secretary Scott Bessant linked the legislation directly to "dollar hegemony."

This is of great significance to Europe, as U.S. dollar stablecoins already have the deepest liquidity in the global crypto market. As we analyzed after the International Monetary Fund warned that local stablecoins could accelerate dollarization, placing domestic and dollar-denominated tokens on the same infrastructure may make it easier for capital to flow to digital dollars.

European policymakers therefore face a practical trade-off. Safeguards around reserves and redemptions remain at the heart of MiCA, but if rules make market access much more difficult than competing markets, they could push liquidity and stablecoin activity elsewhere.

Timeline:

Public consultation deadline (September 30) → May to September 2026: Committee review and draft proposals → mid-2027: Potential new rules take effect (pending legislative conclusion) → 2028 +

DeFi, pledges and lending back on the table

Targeted consultations also solicited feedback on DeFi, pledges, lending and borrowing, and other activities that are difficult to classify within the current framework.

Some of these omissions were intentional when MiCA was drafted. Crypto-asset lending and borrowing are not covered by this regulation and remain governed by national laws while the EU considers whether a common system is needed. DeFi presents different challenges because much of MiCA's content is designed around recognizable publishers and service providers. Agreements that operate without traditional intermediaries are difficult to deal with the same rules.

Pledges have intersected with MiCA in some cases, especially when services involve custody. The review is assessing whether this treatment is sufficient or whether more specific regulations for pledges are needed.

Any expansion in scope will have a direct impact on exchanges and other crypto asset service providers that offer pledge, lending or income products (along with trading and custody). As a result, issues about capital, conduct and disclosure requirements may be as important as the legal definition itself.

NFT is also under review

NFT is another area that tests MiCA's current approach.

The regulation excludes truly unique and non-interchangeable crypto assets, including some digital art and collectibles. The exemption is narrower than labeling the token as an "NFT". Large series or collectibles may still be considered fungible assets based on their actual characteristics.

The current review asks whether developments in the NFT market justify a different approach to service providers operating around these assets.

No decision has been made to broadly include NFTs in MiCA. However, the consultation did reopen a category that was largely excluded from the original framework.

Tokenized finance complicates the situation

Traditional finance is increasingly using infrastructure that overlaps with the crypto market.

Tokenized bank deposits are generally still deposits, not cryptoassets under MiCA; while tokenized securities are still governed by securities laws when they meet the definition of a financial instrument. Both may trade, settle, or interact with systems that support stablecoins and other crypto assets.

Electronic currency tokens create another overlap point. A crypto-transfer may fall within the scope of MiCA and constitute a payment service, raising issues of authorization and compliance under two different frameworks.

These cases demonstrate that tokenization makes legal categories of assets increasingly important, even though multiple products share similar technological infrastructure.

Crypto asset service providers have reason to fight for details now

For exchanges, custodians and other European crypto asset service providers, this review may directly affect the cost and scope of doing business in the EU.

Section 140 requires policymakers to review MiCA compliance costs as a proportion of operating expenses for crypto asset service providers. The consultation also focused on whether current capital requirements are appropriate, whether the definition of crypto services should be expanded, and how the framework will affect European markets.

Industry groups have formulated their positions before the consultation begins. Coinbase urges European policymakers to protect DeFi and self-custody, allow interest-bearing stablecoins, and pursue greater global regulatory consistency as MiCA develops.

For activities outside the scope of MiCA (such as pledges or loans), common EU rules could reduce the cost of responding to different national practices. The outcome will largely depend on how the requirements are designed: additional obligations that are difficult to meet or costly could put EU-facing companies at a disadvantage relative to competitors operating under looser regimes.

This gave exchanges, issuers, banks and industry groups strong motivation to use this consultation to demonstrate where MiCA works well and where it creates unnecessary costs or uncertainties.

Industries race to shape future rules

Industry participants are required to submit responses by the end of September.

The main next step is to submit the statutory report to the European Parliament and the Council of the European Union, with a deadline of June 30, 2027. Brussels will use the evidence gathered by the review to decide whether the changes are reasonable and, if so, what the legislative proposal should include.

By then, policymakers will have to make choices in multiple areas that were not yet resolved at the time of the MiCA negotiations. Global stablecoins are testing Europe's treatment of foreign issuers, DeFi and pledges have raised questions about services outside the original framework, and tokenized finance is bringing crypto infrastructure closer to traditional banking and payment systems.

This review will determine how much activity Brussels ultimately believes should be included in the revised EU crypto regime.

Methodology:

This article is based on official EU regulatory documents, advisory materials, legislation and public statements from relevant authorities.