Crypto exchanges are setting up shops in Europe and obtaining licenses with EU officials, thus bringing more competition to the regulated European market.
So far this year, OKX, Coinbase, Bybit and Crypto.com have all obtained licenses under the EU market in Crypto Assets (MICA) regulations. Although it imposes strict requirements on various services in the cryptocurrency industry, it now means that crypto exchanges in the European Economic Area (EEA) will follow the same rules.
Observers expect this will put Europe ahead of other jurisdictions, such as the United States, which is still developing a basic framework for stabilizers. Indeed, European regulators are already discussing a second regulatory package, “Mica 2.0,” which will fill an unresolved gap in its first iteration.
Mica may offer decent ground rules, but the challenges of communication remain, including new entrants fighting for territory.
Why crypto exchanges move to Europe
The Mica package is an exhaustive regulatory effort in the EU, and it took four years from its establishment to its effectiveness. Its seven titles include laws and rules such as platform regulations, token issuance, market abuse, and more.
Some in the cryptocurrency industry debated the merits of mica, some accused of being accused of the Brussels bureaucrats when they modified and considered in regulatory schemes. May lead to increased surveillance and less freedom of currency.
Compliance may mean a traditional tape for users and communications, but executives highlighted the ability of mica to promote stability, which could bring serious benefits to European exchanges.
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OKX Europe CEO Erald Ghoos told Cointelegraph that moving into Europe provides “a clear regulatory framework (MICA) that provides legal clarity and facilitates long-term planning.”
The mica license also carries a “pan-European passport”. While exchanges must choose the specific jurisdiction to apply for, once certified, they can serve customers in 30 countries of the EEA.
Ghoos said it is now comparable to the advanced consumer standards expected by the traditional financial sector, referring to “access to derivatives and portfolio management clients (…) and “a pair based on the euro, obtaining local payment rail and regional support and regional support”.
Paybis Co-founder and Chief Business Development Officer Konstantins Vasilenko Previously Tell Cointelegraph EU customers increased by 70% by a quarter of a quarter after mica took effect in the first quarter. He said this could be due to increased institutional participation.
“It’s early and there are several other factors that affect the market right now, but we believe MICA has had a positive impact,” said Lukas Enzersdorfer-Konrad, deputy CEO of Bitpanda.
Compliance and possible merger challenges
Establishing in the EU is not without its challenges.
“Unlike other regions, operating in Europe (MICA) requires strict control over investor protection, capital requirements, operational transparency and compliance with anti-currency laundry,” a Bybit spokesman told Cointelegraph.
The spokesman said the requirements mean significant structural changes to the exchange’s operations and are challenging to manage “without damaging the user experience.”
For OKX, diversity in European customers is the main challenge. Gaos said entering the EU means “balance localization (language, customer service, financial standards) with maintaining global infrastructure and scalability”.
OKX wants “for every market, so make sure this is done correctly.”
Some executives expect changes in the European cryptocurrency landscape. A Bybit spokesman said mica would lead to a merger that “separates serious market players from unlicensed actors and promotes healthy, trust-based competition.”
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According to Ghoos, smaller communications may “fight against the cost and complexity of meeting mica standards.” The merger will “benefit larger, technology-enhancing communication (…) that can leverage scale, resources and regulatory preparation.”
These large exchanges include OKX as well as Coinbase and Crypto.com, all of which are mica certified. Coinbase and Crypto.com did not immediately respond to Cointelegraph’s request for comment.
Some people welcome the reorganization. According to Bitpanda’s Enzersdorfer-Konrad, many platforms operate in Europe “for many years” and have not met the provisions of “compliance from day one” with his European local exchanges.
With the main exchanges going on within and under the mica range, “they were followed the same standards – it was necessary to change.”
Europe adopts low cryptocurrency
More and large exchanges are entering Europe, and overall it scores much lower than cryptocurrency adoption in the rest of the world. EU members usually have electronic payment options and relatively stable currencies compared to other countries.
As mica brings more crypto businesses to the mainland, how will more communications get a very slow pie?
Enzersdorfer-Konrad said the adoption rate in Europe focused on “speed trust and regulation”, highlighting long-term growth. He said there are now clear regulations that are fully in effect, “We believe demand and confidence will continue to increase.”
This increased trust may have a knock-knock effect on communication in the form of increased adoption by EU encryption. If institutions see cryptocurrencies as a safer form of investment in traditional safeguards, they may be more willing to join. Enzersdorfer-Konrad says:
“Clear rules increase trust and trust drive adoption. Over time, this will unlock wider retail engagement and give institutions confidence to act.”
The European market may expand due to increased institutional participation, but the consolidation of large new entrants such as OKX and Coinbase, as well as smaller players, could launch a turf war on Europe.
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