Formal MICA Regulation review: towards a stronger EU crypto market

On 23 May the European Commission announced the start of its MICA reviewing process, the. This while the MICA regulation, EU’s landmark crypto regulatory framework, official started on 1 July 2026.

This is not a surprise as the  global crypto landscape is evolving faster than many predicted. The EU is planning major MiCA changes driven by America’s bold GENIUS Act on stablecoins, depending on the outcomes of its consultation process.

MICA Officially start MICA  on 1 July 2026

On July 1, 2026 MiCA fully came into force. MiCA stands for Markets in Crypto-Assets. It is the EU’s rulebook covering how crypto companies issue, trade, and store digital assets across all 27 member states.

On that date MiCA turned from a developing framework into a fully operational regulatory environment that all market participants must now navigate. MiCA is designed to provide a harmonised EU framework for crypto assets, setting rules for issuers and service providers while fostering responsible innovation. This new era aims for greater regulatory certainty while demanding higher standards of operational readiness across the sector. It should be viewed as the beginning of Europe’s next chapter in digital asset regulation.

What MICA  actually covers

MiCA represents one of the most ambitious global attempts to bring digital assets under a unified regulatory umbrella. The framework aims to protect consumers while fostering innovation within clear boundaries.

MiCA covers crypto‑assets, asset‑referenced tokens, and e‑money tokens, along with related service providers across the EU. Asset-referenced tokens are pegged to a mix of currencies, commodities, or other assets. These tokens face stricter rules, including higher capital requirements and closer oversight from the European Banking Authority. E-money tokens must be backed fully by safe reserve assets. They are mostly pegged to one currency like the euro or the dollar.

Crypto-asset service providers (CASP) Authorisation

Firms operating under MiCA need licenses to continue lawful operations within the EU.  Only entities that have secured full CASP (crypto-asset service providers) authorization qualify to continue operations. Providing crypto-asset services without proper authorization is prohibited after this date. For the industry overall, successful adaptation to MiCA requires not only securing the necessary license but also implementing strong technical controls to sustain compliance over time. Once authorized, firms immediately encounter extensive ongoing responsibilities that emphasize proper monitoring and risk management Authorizations accelerated significantly in late 2025 as providers rushed to meet deadlines, underscoring the intense pressure in the final months before the cutoff. MiCA is now fully in force, with 280 crypto firms authorized under the framework as Europe moves into a new phase of crypto regulation. They now face strict reserve requirements, authorization hurdles, and supervisory scrutiny from the European Banking Authority for the larger issuers.

Formal Review MICA Regulation

The European Commission has launched a formal review of the MICA Regulation om 19 May, with the explicit goal of stretching its coverage to cover stablecoins issued by non-EU companies and broaden its scope. The Commission is asking whether the regulations still match the rapidly evolving market or it requires any new adjustments.

The EU is set to revisit its crypto rules with a target implementation of amendments by 2027 in an attempt to address the issue of multiple crypto-asset issuances from non-EU jurisdictions and to expand the framework to cover emerging technologies. The decision signals that Brussels is not resting on its laurels and is prepared to adapt its rules to keep pace with rapid technological and geopolitical changes. MiCA’s review will directly affect issuers, service providers, and financial entities in the EU.

Why the EU Is Reviewing the MICA Rules?

There are various reasons why the European Commission is reviewing MICA. The review aims to preserve strong safeguards while enhancing global competitiveness.

MICA is working well, but this regulation was designed, in 2018, 2019 at a time when crypto markets looked very differently from what they look now. Since MICA was first written the crypto market has undergone significant developments that where not or limited part of the regulation.

In the meantime, the crypto market has expanded far beyond what policymakers anticipated when the regulation was first drafted. The global crypto market has seen multiple runs since MiCA came into effect. The cumulative crypto market cap has surged from $3.3 trillion in May 2025 to hit $4.2 trillion in October 2025.

Digital asset markets and global regulations have changed significantly since MiCA was first developed. New products including stablecoins and tokenised assets have grown quickly worldwide, new technologies, and new ways of using blockchain have appeared much faster than many expected, while traditional financial institutions are increasingly moving into the crypto and tokenised assets space. Regulations worldwide esp. the US GENIUS ACT have entered the market. This has raised questions about whether the current MICA rules cover everything they should.

Stablecoins

Though MiCA already regulates stablecoins through different categories and sets strict requirements for reserves and oversight, MiCA does not specifically govern non-EU companies that issue stablecoins while operating inside the European market. A gap that the EU now wants to close. As stablecoins become more widely used for payments and transfers, officials want to make sure the rules remain clear and effective. EU officials want to make sure MiCA can properly handle stablecoins that come from outside the bloc.

Tokenization

In addition, the digital payments landscape is evolving with new network technologies emerging. One of the biggest developments is tokenization, a process that turns real-world assets such as stocks, real estate, or other investments into digital tokens that can be traded on blockchain networks. The broader tokenization market has been building momentum since MiCA first passed in June 2023. They  have reached an approximate market value of $2.16 billion, reflecting a nearly 45% month-on-month increase.

While MiCA covers many crypto assets, it does not currently have specific rules for tokenized stocks, leaving them under the EU’s existing securities laws. The Commission is therefore assessing whether the EU framework needs to be updated in light of market and international developments.

US GENIUS ACT

The global regulatory environment has also shifted since MiCA was originally drafted. The review is, in part, a direct response to the US Guiding and Establishing National Innovation for US Stablecoins or GENIUS Act, which would establish a federal framework for fully stablecoin issuers. That law, signed last year by President Trump, created rules for US companies that issue payment stablecoins.

The EU’s move signals an acknowledgment of the complex nature of stablecoins, which are pegged to traditional assets like the US dollar and offered in the EU by non-EU companies. These digital currencies play a pivotal role in the digital economy, facilitating swift and low-cost transactions globally. Yet, their rapid proliferation raises concerns about financial stability and security, particularly when issued by entities outside the EU’s jurisdiction.

Public consultation: Gathering feedback

The European Commission wants to check whether the EU’s rules still match how the market and global regulations have moved. Reopening the MICA file seems unavoidable at this stage, citing pressure from European institutions, especially the ECB, and fast-moving regulatory and technological developments abroad. The European Commission is now evaluating if these MICA rules need updates due to market and regulatory changes.  This signals that the Commission is prepared to consider significant changes to the EU’s crypto regulatory architecture.

For that purpose, the European Commission has launched formal consultations to review the MICA Regulation. The consultation revisits the foundational conditions under which crypto assets can be offered to the public or admitted to trading.  The questions span the entire architecture of MICA . The initiative aims to assess whether MiCA remains effective as digital asset markets evolve. It fulfils the Commission’s legal mandates under Articles 140 and 142 of MiCA to report on the regulation’s application and on developments not originally covered as well as submit a formal report to the European Commission and the Council  That report may be accompanied by a legislative proposal. It reflects a broader policy ambition: to ensure that MiCA keeps pace with market evolution and that the EU remains internationally competitive.

Two parallel consultations

The European Commission has launched two parallel consultation tracks on 19 May on the functioning of the MICA Regulation, giving stakeholders until 30 September 2026 to submit feedback and  comprehensive input.  Every major pillar and namely the scope, stablecoins, CASPs, and the boundary between regulated and unregulated activity is open for discussion.

First, a public consultation open to all kinds of stakeholders to submit general feedback on MiCA. The second is a targeted consultation aimed at getting feedback from industry representatives and public authorities. It  collects technical and legal insights from crypto issuers, digital asset service providers, financial institutions, technology firms, regulators, academics and public authorities.

Industry participants may bring valuable insights about technological capabilities, market dynamics, and user needs that regulators might otherwise overlook. The consultation invites stakeholders across the crypto and financial services industry to weigh in on whether MICA is already in need of recalibration, signalling  the EU’s push to close regulatory gaps around tokenized assets and foreign stablecoin issuers. This collaborative spirit could lead to more balanced outcomes.

Review focus

European officials are focusing on several critical areas during their review process. The review is expected to widen MiCA’s scope to cover emerging technologies, which officials expect to grow in the coming years. The MiCA update will specifically target global stablecoin providers, tokenized payments and deposits, and decentralised finance (DeFi) underscoring the bloc’s commitment to staying at the forefront of digital asset regulation.

Focus I: Non-EU stablecoin issuers

As dollar-denominated stablecoins issued by American companies circulate freely across European markets,  the treatment of non-EU stablecoin issuers tops the list, as authorities seek to prevent regulatory arbitrage while maintaining an open market. Officials are examining whether companies based outside the European Union that issue stablecoins but serve European users should be subject to clearer regulatory requirements. As dollar-denominated stablecoins issued by American companies circulate freely across European markets, regulators want equivalence regimes that would hold foreign issuers to comparable standards, including requirements for audits and liquid reserves, or restrict their market access if they don’t comply.

Focus II: Tokenized payments and deposits

Second the tokenization of real-world assets—a rapidly growing sector—will be explicitly addressed to provide legal certainty for issuers and investors. These are newer financial products that did not exist in their current form when MiCA was first written. Officials are looking at whether to add specific MICA rules for tokenized payment systems and deposits, which are anticipated to emerge and grow in the coming years.  Regulators want clearer authority over foreign entities whose tokens circulate freely among European users. As traditional finance increasingly intersects with blockchain technology, regulators want to ensure these new instruments fall under appropriate oversight without stifling their potential benefits.

Focus III: DeFi protocols

A third other focus point is DeFi where international crypto operators wishing to serve European customers. Providing greater legal clarity represents another key objective. Decentralized finance protocols that currently operate outside traditional regulatory perimeters should be brought under a clearer legal framework. The current passporting system under MiCA works well for EU-based entities, but accommodating trusted foreign issuers requires careful thought. Harmonized yet flexible rules could accelerate institutional adoption and bring more sophisticated products to retail users across the continent.

What will be done with the feedback?

The Commission is gathering stakeholder feedback of detailed insights until September 30 from the public and the industry. Feedback from the consultation will inform the Commission’s next steps for MiCA and broader digital asset policies. The process reflects the EU’s proactive approach to evolving crypto markets.

The results will feed into the Commission’s report under Articles 140 and 142 of MiCA and may lead to a formal legislative proposal to amend the regulation,  with any revisions expected to be taken up in 2027 to better compete in a global market.

By seeking feedback from stakeholders, authorities demonstrate willingness to incorporate diverse perspectives before finalizing any updates. Feedback from these entities will guide potential adjustments to MiCA’s operational and compliance requirements. The feedback will shape future EU crypto regulatory policies and ensure alignment with global developments.

ESMA: major review of crypto custody providers under MICA

Supervisors have also tightened their grip, with the European Securities and Markets Authority (ESMA) launching its first common oversight action on crypto custody since the MICA transition period ended. ESMA  has announced a thorough review of custody practices among Crypto-Asset Service Providers.

This new supervisory initiative is aimed at strengthening oversight of cryptocurrency custody providers operating under the European Union’s Markets in Crypto-Assets (MiCA) framework. Reports indicate that more than 80% of previously registered providers still lacked full authorization when the grace period lapsed, leaving service continuity in doubt for many operators. The regulator will examine how companies manage digital asset security, including private key protection, storage systems, and broader operational safeguards.

The initiative reflects growing regulatory focus on one of the most critical parts of the cryptocurrency ecosystem: how crypto firms protect customer assets and manage operational risks as MiCA enters its enforcement phase. The move signals that European regulators are shifting their attention from implementing the rules to actively monitoring compliance across the industry. Officials want to ensure custody providers have mature resilience frameworks capable of protecting client assets against technical failures and cyber threats.

ESMA will coordinate with national competent authorities across the European Union. Each regulator will review a risk-based sample of licensed CASPs operating within its jurisdiction. These reviews should help identify best practices while highlighting areas where additional guidance might be needed. Following the review process, ESMA will compile the findings into a comprehensive report that will be presented to its Board of Supervisors during the second half of 2027.

 Implications for the Global Crypto Market and industry participants

By targeting stablecoins, DeFi, and tokenization, the review aims to keep Europe competitive while safeguarding financial stability.

For crypto businesses, these changes bring both opportunities and challenges. For exchanges, custodians, and token issuers, the prospect of a revised regulatory landscape means potential shifts in compliance costs and market access. Companies already compliant with MiCA might need to adapt their operations to new requirements, while those based outside Europe could face additional hurdles or, conversely, clearer pathways for market access. Companies that rely on stablecoins for cross-border payments or liquidity may need to reassess their strategies if non-EU stablecoins face restrictions.

The ability to operate seamlessly across jurisdictions could determine which projects thrive and which struggle to gain traction. Users, meanwhile, stand to benefit from higher standards and potentially more innovative products. Enhanced rules around reserves and transparency could boost confidence in stablecoins, encouraging their use in everyday commerce and DeFi applications. On the flip side, overly restrictive measures might push innovation elsewhere or create barriers for smaller players.

The review underscores the growing importance of regulatory alignment in the digital asset space. As the US and Europe both move to update their frameworks, other jurisdictions may follow suit, leading to a more harmonized—but also more complex—global environment.

Final remarks: the way forward

The timeline for changes in the MICA regulation points to a thoughtful, measured process. By aiming for implementation around 2027, European officials give themselves time to study the effects of the US GENIUS Act and other international developments. This period will likely see increased coordination between different regulatory bodies, both within Europe and across borders. A final legislative proposal is unlikely before 2028. That means any changes to MiCA would take time to become official law.

The EU is preparing to bring non-EU stablecoin issuers under its supervision. The inclusion of these global stablecoin providers in the MiCA framework is set to have far-reaching implications. The new rules may pose challenges for firms that have not yet aligned with EU standards.

As stablecoins continue to gain traction, the EU’s proactive approach could set a global standard for digital currency regulation as jurisdictions learn from each other’s experiences, ensuring that the benefits of stablecoins are realized without compromising financial security or stability. With proper oversight, they could become the preferred medium for cross-border payments, remittances, and as a bridge between traditional and digital economies.

The evolving regulatory landscape will likely push companies to innovate and adapt, fostering a more secure and stable environment for digital currency transactions. Clearer regulations often serve as catalysts for growth. Banks and traditional financial institutions that previously hesitated may become more willing to engage once rules are settled. This institutional participation could bring substantial liquidity and legitimacy to the sector.

MiCA will continue guiding the convergence of traditional finance and crypto markets in the EU. For stakeholders across the crypto and financial services industries, this is an important opportunity to shape the next generation of EU crypto regulation. The transatlantic dialogue, even when it involves competition, ultimately benefits the entire industry. Thoughtful regulation, when done right, doesn’t hinder progress but provides the guardrails necessary for sustainable growth.