In May, the European Commission opened a comment period, seeking feedback on regulations for the cryptocurrency and blockchain industries.
The comment period will precede eventual revisions and additions to the Markets in Crypto Assets (MiCA) legislative framework. Some have already dubbed the expected new framework “MiCA 2.0.”
Katie Harries, director and head of policy for Europe at Coinbase, told Cointelegraph that there are several key areas where “refinements could help ensure the framework remains competitive in the next phase of digital asset regulation.”
With an updated version of EU crypto law, the crypto industry is looking for more regulatory clarity in DeFi, stablecoins and tokenization.
MiCA was just the first step
Full application and enforcement of MiCA rules began on December 30, 2024, with the first licenses issued in the first months of 2025.
While the legislative process was long and complex, the EU still managed to create a regulatory framework for crypto ahead of the United States. Per Harries, “MiCA helped set an early global benchmark for digital asset regulation and gave the EU a first-mover advantage.”
It represented an “important first move” for the EU which created a “a single, harmonised rulebook for crypto” among its member states. “It gave 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 provided a foundation on which it can expand its business in Europe into “the next phase of adoption across both retail and institutional markets.”
Now, Brussels is looking to recalibrate its landmark legislation. The consultation is split into four parts:
- Regulatory scope and definitions for crypto assets other than asset-referenced tokens (ARTs) and e-money tokens (EMTs)
- Requirements for EMTs, ARTs and their issuers
- Defining legal framework for crypto-asset service providers (CASPs)
- Topics that MiCA 1.0 didn’t cover e.g., DeFi and prediction markets
Stablecoin discussion has regulatory consequences
Per Catarina Veloso, director of regulatory and compliance at Notabene, part 2, which would affect stablecoins, is “longest and arguably the most politically charged section of the consultation.”
How stablecoins are used, be it as a mainstream retail payment instrument, a wholesale settlement rail, or a “complement to existing payment methods for cross-border payments,” could have a significant effect on how stablecoin policy is made.
“If stablecoins are treated mainly as crypto trading instruments, the focus is likely to remain on investor protection and market integrity. If they are treated as payment infrastructure, then redemption, liquidity, reserve management, operational resilience and supervisory reporting become much more central.”
What risks they carry “depend heavily on how they are used, at what scale, by whom, and in connection with which parts of the financial system.”
Harries said that Coinbase would like to see MiCA 2.0 “make euro stablecoins more competitive by recalibrating rules around reserves, rewards and the multi-issuance model.” Allowing a greater share of stablecoin reserves to be held in “high-quality sovereign assets could reduce risk without compromising safety.”
Another aspect is stablecoin rewards. Currently, EMT issuers are prohibited from offering interest. But, per Veloso, “this can weaken the competitiveness of euro-denominated stablecoins and push users either toward foreign-currency stablecoins or toward yield structures outside the regulated perimeter.”
Harries said that “MiCA should allow non-interest incentives such as cashback and loyalty programmes, which are standard features across payments and help drive competition and consumer choice.”
Bringing DeFi and prediction markets into the fold
Presently, MiCA does not cover CASPs that are fully decentralized and operate without any kind of intermediary. Veloso noted that, while it sounds simple, “decentralisation is rarely binary.”
To form an informed policy around DeFi, EU regulators must know how to assess whether a CASP is fully decentralized and “what indicators should matter: control over the protocol, governance rights, admin keys, front-end control, revenue capture, upgradeability, or the ability of identifiable persons to influence outcomes.”
According to Miroslav Đurić, a senior associate at Taylor Wessing, many CAPSs already connect their clients with DeFi platforms. But since these platforms are exempt from MiCA, regulators are now asking “whether CASPs should meet their fiduciary duty vis-à-vis clients by conducting due diligence over DeFi platforms that they make accessible to their clients.”
“The Commission appears to be ready to explore different approaches incl. some that might only permit CASPs to connect their clients with DeFi platforms that are certified (under some new certification regime).”
Prediction markets are also a hot topic currently considered in the EU. Currently there is no unified regulatory structure, and prediction markets are banned in some countries.
The Commission is seeking comments on whether these offer any economic benefit for consumers, and whether they fall under MiCA or Markets in Financial Instruments Directive (MiFD).
Đurić said this will depend on the nature of the contracts themselves. “Depending on the event contracts available on the platform […] a platform operator can easily become subject to requirements stipulated under different, sometimes conflicting regulatory frameworks: ranging from MiFID II over gambling to MiCA regulatory framework.”
What’s next?
Crypto industry observers say they intend to remain in dialogue with Brussels throughout the process. Harries said that a new, effective MiCA will require “dialogue between industry, policymakers and regulators, learning from how the framework is working in practice and refining areas where greater clarity or flexibility can help support the next phase of growth across the region.”
The period for comment ends on Aug. 31, but according to Đurić, the total process could take years.
“Given the level of complexity of the points raised in the consultation as well as the usual pace at which the EU legislative process moves […] it is hardly expectable that any concrete legislative proposals will be adopted before 2028.”
