Launched between June 2023 and December 2024, the European Union’s (EU) Markets in Crypto-Assets (MiCA) regulation was the first of its kind. It introduced a need for compliance into a space that had previously been beyond the remit of any governmental oversight. It was an exercise that could only be contentious. So, it’s hardly surprising that it’s been met by scrutiny and criticism. But while MiCA is a cause for concern to many within the EU, for the UK it could potentially be beneficial.
Why the EU is struggling with MiCA
The MiCA regulation has drawn significant criticism from both industry insiders and analysts, with concerns broadly converging around five main issues. Chief among them is the glaring omission of stablecoins from MiCA’s scope. Given that the digital currency is seen as one of the riskiest crypto assets due to its systemic volatility, as well as its potential to destabilise not only the crypto markets but the broader financial system, this exclusion has raised multiple eyebrows. So, the EU’s decision to regulate the rest of the crypto space while leaving stablecoins unregulated is widely regarded as both bizarre and problematic. It also undermines the perceived effectiveness of MiCA. This makes its more stringent provisions seem almost futile, while stablecoins are left unfettered.
On the other hand, in the areas MiCA does cover, there are growing fears that the regulation could stifle the innovation that has been central to the crypto sector’s rapid progression. Breakthrough technologies, such as blockchain, tokenised assets, and decentralised finance, have all emerged from the crypto space. But now, with compliance costs climbing, smaller companies and startups – the traditional drivers of innovation – are being pushed out of the EU’s crypto market. This risks stagnating growth across the industry.
Compounding the issue is MiCA’s apparent lack of futureproofing. Despite its rigid framework, it appears to hold no contingencies for future technological developments or emerging threats. This could potentially leave loopholes for fraudulent activity and other bad actors.
Additionally, there remain concerns regarding the cost of compliance. With this likely to be passed on to consumers, it holds the potential to raise barriers to entry while driving investors toward more affordable, less regulated markets – potentially including the UK.
Lastly, the delayed release of MiCA’s regulatory technical standards (RTS) – which were not made available until more than 18 months after the legislation began to come into play – created prolonged uncertainty during implementation. Uncertainty that could have been avoided. It may also have helped resolve other concerns if addressed earlier.
Collectively, these issues have cast a shadow over what could have been a positive move for the crypto space, bringing authenticity, accountability, and stability. The question is, how could MiCA’s failure to do all this help the UK’s crypto space?
MiCA’s impact on the UK
If the UK is clever, there are two ways in which it could use the problems with MiCA to its own advantage.
Better Regulation
With the EU was the first territory to roll out crypto regulation, it won’t be a lone player for long. The UK is currently in the process of preparing its own version of MiCA. The Financial Conduct Authority (FCA) is suggesting 2026 implementation. MiCA can provide the learning experience that the EU lacked. It doesn’t just offer a potential framework – it shows why the traditional financial regulatory framework, adopted by MiCA, is unsuited to the crypto space. It provides clear, working examples of what not to do. But it also provides points of success that the UK can build upon – because despite the detractors, there are many good things about MiCA. The FCA can use all of this information to build a better regulatory infrastructure that limits the potential for fraud and dishonest behaviours, while helping to foster future growth and innovation – something that the crypto space has long been crying out for.
If the UK does well with this, it could set the global standard for crypto regulation, raising its status in an area where it has previously been lacking.
Market growth
Before we get to regulation, however, there is also the potential for the UK market to benefit from the EU’s troubles. Right now, the EU’s crypto investors and startups are unhappy and looking for alternative places to put their money. The UK could be one of those places.
The UK has has only really ever dabbled in crypto. After more than 15 years, there are only around 40 registered crypto businesses in the UK, compared to more than 2,000 in the EU, and 4,852 in America. This could be the time for the UK to grow. The US is currently in a state of political and financial turmoil, making many investors wary. By contrast, the UK is a friendly near-neighbour, with a near-universal language. It won’t take much to tempt European investors and startups across – something that could be sustainable, if the FCA makes the right regulatory decisions.
ICONOMI – Growing the UK Crypto Market
ICONOMI is in the process of doing this. We’re officially licensed in the UK and preparing to enter the EU market under a MiCA license. This means, we’ll shortly have the ability to passport our license in other EU member states. This means the ability to attract customers from other territories across the EU. If other UK crypto businesses follow suit, there is significant potential to generate growth for the UK crypto market. For the short and longer term.
Cryptocurrency was never intended to go mainstream. When Satoshi Nakamoto launched Bitcoin, they had a vision of a currency that could operate outside of traditional financial institutions and regulation. Meanwhile, providing transparency and trust through technology. But the space evolved beyond expectation, creating more than 25,000 other cryptocurrencies in the process. They are worth literally billions of pounds, and millions of people have a stake in the market. If the crypto market crashes, it could significantly impact the wider economic ecosystem globally. So, no one is arguing against the fact that the crypto space needs regulation. Only that it needs to be regulated properly. And the UK could be the country to do that.
Peter Curk is the CEO of ICONOMI, a leading platform in digital asset management. With a background in finance and blockchain, Peter is passionate about making crypto investing accessible and easy for everyone. Under his leadership, ICONOMI has grown into a trusted name in the industry, offering innovative solutions for individuals and institutions alike.
- Blockchain