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MiCA and the crypto market: from chaos to clarity

The goal of the MiCA bill

Markets in Crypto-Assets (MiCA) is not just another legislative initiative but rather the EU's attempt to assume the role of a global regulator in the world of decentralized finance (DeFi), establishing its standards of transparency, investor protection, and stability.

From legal chaos to regulatory clarity

Before MiCA came into force, crypto exchanges, decentralized platforms, and other crypto service providers operated under legal uncertainty. This created chaos regarding what crypto assets legally represented.

For example, in Germany, Bitcoin was recognized as a financial instrument, while in France, it was classified as a digital asset. However, the new Markets in Crypto-Assets regulation brought clarity to this matter as well. According to MiCA, Bitcoin and other volatile cryptocurrencies are recognized as "crypto-assets."

In this context, a crypto-asset is defined as a digital representation of value or rights that can be transferred and stored electronically using blockchain technology or its equivalents.

The MiCA regulation also introduced a precise classification of tokens:

  • Electronic Money Tokens (EMTs) — stablecoins pegged to a single specific currency (e.g., USD or EUR);
  • Asset-Referenced Tokens (ARTs) — a type of digital asset maintaining stable value by being backed by other assets, rights, or their combination;
  • Utility Tokens (UTs) — crypto-assets providing access to goods or services via digital platforms.

Crypto exchanges leave the EU

One of the key aspects of the new regulation was oversight of providers offering crypto services to EU residents. Under MiCA rules, crypto providers must obtain a license from the European Securities and Markets Authority (ESMA) to operate.

At the same time, the new rules provide crypto providers with global access to EU markets. A company only needs to obtain a license in one EU country, after which it can offer crypto services across the entire Eurozone.

According to the European Securities and Markets Authority, as of March 2025, a total of 247 applications were submitted for a Crypto-Asset Service Provider (CASP) license. 112 companies (just under half) received temporary registration, while 31 (12.5%) were denied a permit.

According to Chainalysis, as a result of mandatory licensing under MiCA, the number of operating crypto exchanges in the EU dropped by 38% by March 2025 — from 154 to 95.

The dominant players in the EU market became Kraken, Bitstamp, Bitpanda, eToro, and Anycoin Direct. Experts predict that by 2026, the number of licensed providers in the EU will stabilize at 130–150.

Analysts also believe Croatia, Portugal, and Greece will become leaders in the number of Web3 startups launched, as these countries offer simplified CASP licensing procedures.

Decline of USDT and the rise of USDC

A key aspect of MiCA regulation was the oversight of stablecoins. Under the new rules, stablecoins must be fully backed by reserves and undergo regular audits (at least once per quarter). The reserves themselves must consist of liquid assets (e.g., treasury bonds or bank deposits).

As a result, the stablecoin market underwent the following changes:

  • The quality and reliability of stablecoins have increased. "Opaque" stablecoins with questionable reserves and insufficient audits left the EU market;
  • Major crypto exchanges adapted to the new MiCA rules and delisted several non-compliant stablecoins, such as USDT, FDUSD, DAI, FRAX, GUSD, USDP, and TUSD, or banned EU users from trading them.

According to Kaiko, in Q1 2025, Tether's (USDT) share of trading volume on European exchanges fell from 62% to 38%. The dominant stablecoin in the EU market became USD Coin (USDC) from Circle, which fully complies with the new rules, unlike Tether.

Over the past year, the trading volume of Circle's other stablecoin, Euro Coin (EURC), grew from $1.2 billion to $5.8 billion. The composition of trading pairs on crypto exchanges also changed. For example, Binance removed the USDT/USDC pair, replacing it with USDC/EURC.

The impact of MiCA on the decentralized finance sector

Experts note that the decentralized finance (DeFi) market remains a "grey regulation zone." DeFi platforms may become one of the main ways to circumvent MiCA rules, which could require additional regulation of this sector.

Thus, major decentralized exchanges and other DeFi protocols fell under CASP oversight and complied with regulatory requirements. For example, leading DeFi platforms — the Uniswap DEX and the Aave lending protocol — restricted EU access through their official interfaces. However, these blocks are still easily bypassed using special software tools.

According to DeFi Llama, the total value locked (TVL) in the EU DeFi market dropped by 29% over just two years — from $21.4 billion to $15.2 billion, while the number of new DeFi projects headquartered in the EU declined by 41%.

MiCA did not destroy DeFi but made the industry less attractive for developers, who relocated to more crypto-friendly regions such as Dubai, Singapore, and Switzerland.

© BestChange.com – , updated 08/25/2025
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