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The EU and Beyond: How MiCA Can Balance Innovation, Compliance, and Crypto’s Future

3 mins
Updated by Maria Petrova
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In Brief

  • MiCA regulation provides legal clarity for crypto assets, promoting innovation.
  • The regulation will enhancesinvestor trust through comprehensive guidelines.
  • MiCA sets a crypto regulatory model for other regions, YouHodler CEO says.

The Markets in Crypto-Assets (MiCA) regulation marks a significant turning point for the crypto industry within the European Union (EU). As these new regulations come into force, crypto companies are poised to navigate both challenges and opportunities.

In an exclusive interview with BeInCrypto, Ilya Volkov, CEO of crypto platform YouHodler, shared his insights on how MiCA will shape the future of crypto-financial services.

Impact on Crypto Growth, Innovation, and Consumer Trust

MiCA is the first explicit regulation for crypto assets in the EU, offering legal clarity for stakeholders. It categorizes digital assets, specifies applicable regulations, and designates accountability for enforcement.

This regulation addresses regulatory issues, ensuring a level playing field for crypto institutions in the EU and eliminating regulatory fragmentation among member states. Moreover, it protects investors, prevents fraud, and ensures compliance with anti-money laundering (AML) and financial laws. Volkov views MiCA as a groundbreaking step in creating a cohesive regulatory environment for crypto assets across the EU.

Read more: What Is Markets in Crypto-Assets (MiCA)?

“The major advantage is that MiCA is a meaningful step forward to fixing the long-existing disconnect between global operations and local regulations,” he opined.

He pointed out that financial markets, including crypto, operate globally but are subject to local regulation. This inconsistency has historically posed significant hurdles for international Web3 companies and individual customers alike.

“For companies like Youhodler, regulatory frameworks like this will significantly facilitate access to international markets. In MiCA’s case, it allows companies to reach all EU member states without submitting repetitive license applications in every country,” he added.

Furthermore, MiCA’s comprehensive requirements and guidelines to enhance consumer protection can foster a more transparent and trustworthy crypto market. Volkov believes that transparency is crucial for building consumer confidence. 

“Protected by MiCA, consumers can now tell whether their digital wealth is in the hands of a legitimate service provider. This peace of mind goes a long way for individuals and the mass adoption of crypto,” he stated.

The regulations also address environmental concerns associated with crypto operations. YouHodler has proactively aligned its operations with sustainable practices, with its research and development team working to update the company’s tech infrastructure to save energy and reduce environmental impact.

MiCA’s regulatory framework also offers unique opportunities for companies like YouHodler to stay ahead in the competitive crypto market. By expediting the licensing process, MiCA facilitates the expansion of YouHodler’s footprint across the EU.

Volkov acknowledged the hard work required to upgrade the platform for compliance but emphasized that the additional layers of regulation and protection will help the company stand out by filtering out unqualified players, such as non-compliant offshore companies targeting EU customers.

Balancing Advantages and Disadvantages of MiCA

Despite the clarity, adapting to MiCA’s requirements presents unique challenges. For instance, providing yield products on stablecoins has been a common practice for Crypto Asset Service Providers (CASPs) and exchanges for the past five years. However, companies serving EU customers will no longer be able to do this due to the initial phase of MiCA, which addresses stablecoins.

Recent reports also indicate that several crypto exchanges, including Binance, are delisting certain crypto assets to comply with MiCA regulations. Volkov highlighted the necessity for YouHodler and other Web3 platforms to migrate from non-compliant stablecoins to those meeting MiCA standards. Currently, he sees USDC as the most compliant dollar-backed stablecoin, but Volkov anticipates the emergence of more compliant options soon.

“Our team is working diligently to update our products and services to ensure full compliance and timely support for customers looking to convert their digital assets,” Volkov affirmed.

Additionally, the current version of MiCA has yet to cover decentralized finance (DeFi) adequately. However, Volkov is confident that future updates will address this innovative and active part of the crypto ecosystem.

Nonetheless, the global implications of MiCA cannot be overstated. Volkov believes that MiCA sets a precedent for international crypto regulation, serving as a model for other regions.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

“Countries in Latin America and Asia will adopt similar approaches in the near future. Speaking of this, we’re also getting ready for the LATAM market. We have submitted our application in Argentina,” he told BeInCrypto.

As the industry prepares for potential market turbulence within the first year of MiCA’s implementation, Volkov remains optimistic about long-term sustainable growth. He believes that MiCA represents a significant step forward, instilling a sense of readiness and anticipation for the future of crypto.

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Lynn Wang
Lynn Wang is a seasoned journalist at BeInCrypto, covering a wide range of topics, including tokenized real-world assets (RWA), tokenization, artificial intelligence (AI), regulatory enforcement, and investments in the crypto industry. Previously, she led a team of content creators and journalists for BeInCrypto Indonesia, focusing on the adoption of cryptocurrencies and blockchain technology in the region, as well as regulatory developments. Prior to that, at Value Magazine, she covered...
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