Why MiCA may be good for the UK’s crypto space

I'm pleased to bring you this opinion piece on the topic of crypto-asset regulation from Peter Curk, CEO of leading digital asset management platform, ICONOMI.

There are understandably quite a variety of opinions on the topic. I've seen the issue up close in my time as a Group Chief Digital Officer, then later as a Chief Transformation Officer. I saw all angles – and as the 'crypto-positive' voice in the room, I would routinely have to defer to other colleagues who had to make a determination when there was little or no guidance at all from regulators and lawyers. And when the risk of getting it wrong meant fines – or in some jurisdictions, the potential of jail time!

Peter argues that the EU MiCA rules could well be very helpful for the UK... if...

Over to you Peter:

The introduction of MiCA, the European Union’s (EU) Markets in Crypto-Assets regulation, has been met with some resistance. Expectedly so. Launched between June 2023 and December 2024, it is the world’s first attempt at formal regulation of the cryptocurrency space. So, it was always going to be a controversial matter. While most people believe that the sector really could benefit from much of the oversight that regulation brings, it’s the details of MiCA that many people object to. It has raised a range of concerns, both practical and theoretical – and counterintuitively, this may be a good thing for the UK.

What’s going wrong with MiCA?

The criticism levelled at MiCA has been far ranging, both from businesses and analysts. But when you take away the hyperbole and generalisation, most of the concerns boil down to five main points.

Stablecoins

The MiCA regulations do not cover stablecoins. Why is this a problem? Because while the crypto industry as a whole has been widely viewed as risky and unstable, stablecoins take this characteristic volatility to a whole new level. When unstable, they don’t just hold the potential to significantly damage the crypto markets, but to impact the wider financial ecosystem. So, why the EU saw fit to regulate the crypto space while leaving stablecoins unfettered is an unfathomable question, subject to much debate. Ultimately, it leaves MiCA’s other strictures appearing almost futile.

Industry development

As for the areas of crypto that have been regulated, they raise their own concerns. Particularly in relation to how they are likely to impact the groundbreaking innovation that the industry has become known for. During the decade or so since the crypto space became truly established it has spawned numerous technological advancements – blockchain technology, tokenised assets, and decentralised finance, they’ve all evolved from the crypto space. The concern with MiCA is that right now, it looks like it's going to stifle that innovation. Smaller crypto companies and startups are already being priced out of the EU because they simply can’t afford to implement the changes necessary for compliance. Without that new blood, innovation can only slow, if not entirely stagnate, which will impact both the crypto industry and the wider financial system.

A lack of futureproofing

While a lot of focus is being put on the rigidity of MiCA and its impact on new business, there’s a flipside highlighting the gaps in the regulation that the same rigidity could create. There seems to be no contingency to protect against future developments. Because although MiCA is being accused of squeezing out startups and small businesses, there will always be new bad actors, and MiCA does not have a framework to protect against the development of loopholes within emerging practices and tech.

Cost to consumers

Regulation isn’t cheap. So, we have the question of who will pay for it – and it’s almost inevitable that the answer will be the end user. Of course, there’s nothing to stop businesses from behaving morally and absorbing the costs, but with nothing in the regulation to ensure this happens, fees and fines will always be passed on. And the greater expense is likely to deter both new and existing investors, sending them away to invest in overseas markets.

Regulatory technical standards

This last point is approaching moot at this stage, but it’s still worth mentioning. MiCA’s regulatory technical standards (RTS) weren’t published until more than 18 months after the bill’s introduction. This caused uncertainty and confusion within the sector throughout the introduction period. And had this not been the case, there’s a chance that some of the other concerns may have been able to be addressed before the legislation went live.

What MiCA could do for the UK

So, those are the issues that are haunting MiCA. How could they benefit the UK?There are two main ways in which MiCA could be good for the UK.

1) Better regulation

It’s already known that the UK is in the process of preparing its own cryptocurrency regulations. The Financial Conduct Authority (FCA) has posited 2026 implementation. With MiCA, they have the ultimate learning experience available. They don’t just have a framework to build upon, but working examples of what is and isn’t viable. Because while the noise continues around MiCA’s limitations and mistakes, there are plenty of things that it does well. The FCA has the opportunity to cherry pick the positives and find their own solutions to the limitations and negatives. With careful consideration and industry consultation, this could potentially enable them to set the gold standard in crypto regulation. 

2) Market growth

On the other hand, there is also the potential for the UK market to benefit from the EU’s struggles. With MiCA raising such concerns, the EU’s crypto investors are looking for alternative places to put their money. And the EU’s would-be crypto businesses are looking for a new home.

As things stand, the UK is not a big player on the global crypto stage. 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. But with turbulence in the US, the UK offers stability. And as the EU’s nearest neighbour, with a near-universal language, there’s plenty to tempt businesses and investors across. This is something that my business is in the process of doing right now. We’re officially licensed in the UK and the Netherlands, but because we will have the ability to passport our license in other EU member states (MiCA admin is underway!), we will shortly have the ability to attract customers from other territories. And we’re not alone in this. The potential is there to generate significant growth for the UK crypto market – and enhance its global standing.

No one ever planned for cryptocurrency regulation. The idea was to create something other, something unshackled by the norms of traditional finance. But the space has grown. It’s no longer just Bitcoin making waves, there are now more than 25,000 other cryptocurrencies in the marketplace. And they are worth literally billions. With such potential to impact the wider financial market, it can’t be left as a cowboy state. Regulation is needed. And the EU has been the brave pioneer to take the first step.

Now, it's time for the UK to step up and see if it can do better.

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.

Thank you very much for taking the time to contribute, Peter. Connect with him on LinkedIn and find out more about his company ICONOMI at www.iconomi.com.