In May, the European Commission opened a comment period, seeking feedback on the regulation of the cryptocurrency and blockchain sectors.
The comment period will precede possible revisions and additions to the Legislative Framework for Crypto Asset Markets (MiCA). Some have already dubbed the expected new framework “MiCA 2.0”.
Katie Harries, director and head of European policy at Coinbase, told Cointelegraph that there are several key areas where “improvements could help ensure the framework remains competitive in the next phase of digital asset regulation.”
With an updated version of the European Crypto Law, the crypto industry is seeking more regulatory clarity when it comes to DeFi, stablecoins, and tokenization.
MiCA was just the first step
Full implementation and enforcement of the MiCA rules began on December 30, 2024, with the first licenses being issued in the first months of 2025.
Even though the legislative process was long and complex, the EU still managed to create a regulatory framework for crypto ahead of the United States. According to Harries, “MiCA has helped set a world-first benchmark for digital asset regulation and given the EU a first-mover advantage. »
This is an “important first step” for the EU in creating “a single, harmonized regulation for cryptography” among its member states. “This has given consumers greater protection and transparency, while providing businesses with the regulatory clarity needed to build, invest and grow across the bloc.”
Harries said that, for Coinbase, MiCA has provided a foundation on which it can expand its business in Europe into “the next phase of adoption in the retail and institutional markets.”
Today, Brussels seeks to recalibrate its historic legislation. The consultation is divided into four parts:
- Regulatory scope and definitions of crypto assets other than asset-referenced tokens (ART) and electronic money tokens (EMT)
- Requirements for EMTs, ARTs and their transmitters
- Defining the legal framework for crypto-asset service providers (CASP)
- Topics that MiCA 1.0 did not cover, for example, DeFi and prediction markets
Stablecoin discussion has regulatory consequences
By Catarina Veloso, Director of Regulatory and Compliance at Notabene, part 2, which affect stablecoins, is “the longest and arguably most politically charged section of the consultation”.
How stablecoins are used, whether as a common retail payment instrument, a wholesale settlement system, or as a “complement to existing payment methods for cross-border payments,” could have a significant effect on how stablecoin policy is developed.
“If stablecoins are treated primarily as crypto trading instruments, the focus will likely remain on investor protection and market integrity. If they are treated as payment infrastructure, then redemption, liquidity, reserve management, operational resilience, and supervisory reporting will become much more central.”
The risks they carry “depend heavily on how they are used, on what scale, by whom and in relation to which parts of the financial system”.
Harries said Coinbase would like to see MiCA 2.0 “make euro stablecoins more competitive by recalibrating the rules around reserves, rewards and the multi-issuance model.” Allowing a larger share of stablecoin reserves to be held in “high-quality sovereign assets could reduce risks without compromising security.”
Another aspect concerns stable rewards. Currently, EMT issuers are prohibited from offering interest. But, according to Veloso, “this may weaken the competitiveness of euro-denominated stablecoins and push users either towards foreign currency stablecoins or yield structures outside the regulated scope.”
Harries said that “MiCA should allow interest-free incentives such as cashback and loyalty programs, which are standard features in payments and help drive competition and consumer choice. »
Integrate DeFi and Prediction Markets
Currently, MiCA does not cover PSAPs which are fully decentralized and operate without any intermediaries. Veloso noted that while it seems simple, “decentralization is rarely binary.”
To develop informed policy around DeFi, EU regulators need to know how to assess whether a CASP is fully decentralized and “what indicators should be important: control over the protocol, governance rights, administration keys, front-end control, revenue capture, scalability, or the ability of identifiable individuals to influence outcomes.”
According to Miroslav Đurić, senior partner at Taylor Wessing, many CAPS have already connect their customers with DeFi platforms. But because these platforms are exempt from MiCA, regulators are now questioning “whether PSAPs should fulfill their fiduciary duty to customers by conducting due diligence on the DeFi platforms they make available to their customers.”
“The Commission appears willing to explore different approaches, including some that could only allow PSAPs to connect their customers to certified DeFi platforms (under a new certification regime).”
Prediction markets are also a hot topic currently being studied in the EU. There is currently no unified regulatory structure and prediction markets are prohibited in some countries.
The Commission is seeking comments on whether these measures provide an economic benefit to consumers and whether they fall under the MiCA or the Markets in Financial Instruments Directive (MiFD).
Đurić said it would depend on the nature of the contracts themselves. “Depending on the event contracts available on the platform […] a platform operator can easily be subject to requirements stipulated in different, sometimes contradictory, regulatory frameworks: ranging from MiFID II to gaming via the MiCA regulatory framework.
What’s next?
Crypto industry observers say they intend to remain in dialogue with Brussels throughout the process. Harries said an effective new MiCA will require “dialogue between industry, policymakers and regulators, learning how the framework works in practice and refining areas where greater clarity or flexibility can help support the next phase of growth in the region”.
The comment period ends on August 31, but according to Đurić, the whole process could take years.
“Given the level of complexity of the points raised during the consultation as well as the usual pace at which the European legislative process evolves […] it is unlikely that concrete legislative proposals will be adopted before 2028.”
