Robinhood’s recent acquisition of the crypto exchange Bitstamp has prompted questions about the impact of the EU’s impending Markets in Crypto Assets (MiCA) legislation on crypto startups in the region. According to Ledger’s Global Head of Policy, Seth Hertlein, the upcoming rule would further make it difficult for companies in the region to compete with their counterparts globally.
Also Read: Robinhood announces acquisition of crypto exchange Bitstamp
While several crypto community members interpreted Robinhood’s acquisition of Bitstamp as further evidence of the crypto industry’s growth, Hertlein views it as an example of how the EU’s strategy of regulating early, with the example of MiCA, was how the region was making European firms less competitive to their rivals.
He said:
“MiCA was heralded by the EU institutions (and much of the crypto industry) as ensuring that Europe ‘wouldn’t lose Web3 the way it lost Web2.’ That line, in particular, was quoted ad nauseum. Except, MiCA (together with the constellation of regulations the EU continues to erect around it) guarantees just the opposite.”
How EU’s MiCA embrace harms European crypto firms
In his social media post, Hertlein explained that the MiCA legislation would leave EU authorities with no European crypto businesses to regulate because the law’s cost, complexity, and restrictiveness would make it difficult for small companies or startups to cope. So, he believes that MiCA will be another millstone the EU hung around its neck that would prevent EU-based firms from growing.
“[Robinhood’s] Bitstamp [purchase] is evidence that the MiCA effect began even before MiCA fully came into force…When it comes to global competitiveness, overregulating is the surest way to lose, and no one is better at it than the EU.”
Hertlein said.
The crypto executive noted that the situation would have been avoidable if the regulators had placed an “emphasis on enhancing EU competitiveness and [the MiCA law had] healthy input from technical experts.”
Meanwhile, Hertlein opined that emerging markets are best positioned to realize crypto potential because they have lower regulatory burdens.
“Through crypto, APAC, LATAM, and Africa have an opportunity to leapfrog the legacy markets that are so intent on using state power to protect the status quo.”
Hertlein added.
MiCA to become effective by June 30
Despite Hertlien’s strong criticisms, his opinions contradict the general sentiment of the crypto industry about MiCA. The regulation passed into law in June 2023 and will become effective by June 30, 2024, has attracted praise from the crypto industry. Stakeholders have used it as an example of the much-needed regulatory clarity that United States regulators have failed to provide.
With the specialized rules for stablecoin issuers set to become effective by the end of June, regulators and crypto-focused businesses are already preparing for the changes. Binance recently announced restrictions on unauthorized stablecoins for its users within the European Economic Area (EEA). The limits become effective by June 30. OKX also discontinued support for USDT trading pairs within the EEA in March.
Also Read: Everything you need to know about the EU MiCA regulation on cryptocurrencies
Regulators are also gearing up to implement the rules, but it is expected that the grace period for each EU member state might be different. Most countries already have designated authorities to implement and enforce the rules. By December 2024, other regulations, including licensing requirements for crypto-assets service providers (CASPs), will also become effective.
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