PolicyThree years after the implementation of MiCA, Europe is reassessing its crypto regulatory framework through a consultation process, informally referred to as "MiCA 2.0," which is set to conclude in September.
Review of MiCA Framework
By Ian Allison|Edited by Sheldon Reback Jul 2, 2026, 11:55 a.m. 5 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on
ESMA is likely to become the centralized supervisory body for the crypto regulatory framework. (ESMA/Media)Key Points:- Originally crafted for spot crypto, MiCA now faces scrutiny as the rise of stablecoins and tokenization impacts institutional finance.
- European regulators have softened their initial skepticism towards stablecoins, particularly after the U.S. introduced the GENIUS Act.
- Concerns remain about the management of stablecoin reserves by non-U.S. banking authorities.
It has been six years since the concept of Europe’s Markets in Crypto Assets (MiCA) was first proposed, and three years since its official enactment. The landscape has shifted significantly, particularly with the increased interest in stablecoins for global transactions.
This growing interest has pushed stablecoins, which are cryptocurrencies tied to fiat values, into the spotlight as MiCA is currently undergoing a review to prepare for what is referred to as "MiCA 2.0," an amendment to the prior regulatory framework primarily focused on spot crypto.
The European Central Bank has consistently expressed concerns that the prevalence of dollar-pegged stablecoins may undermine its monetary authority across the eurozone. While the ECB favors the introduction of a central bank digital currency (CBDC) over euro-pegged stablecoins, some policymakers are now more open to the idea of stablecoins, as indicated by John Orchard, chairman of the Digital Monetary Institute at OMFIF, which specializes in central banking research and economic policy.
“If you listen to European Central Bank officials, you'll notice their opinions change depending on the individual,” Orchard remarked in an interview. “But they are now willing to tolerate stablecoins on bank balance sheets and perhaps as a remittance tool, although they are hesitant about their use for wholesale settlements, unlike the U.S. which is exploring that option.”
In 2025, the U.S. passed the GENIUS Act, establishing a framework for stablecoin payments and assigning oversight responsibilities to the Federal Reserve and the Office of the Comptroller of the Currency, two key regulators. Currently, dollar-denominated stablecoins represent $310 billion of the total $311 billion market, with non-dollar stablecoins making up less than 0.5%, according to data from DeFiLlama.
Concerns Over Deposit Flight
There are also complex issues surrounding yield distribution and the risk of deposit flight, where funds are transferred from traditional bank accounts to blockchain wallets. This topic is addressed within the Clarity Act in the U.S., which has reached a contentious compromise and remains pending legislation.
“The banking lobbies in both the U.S. and Europe have effectively opposed allowing stablecoins to offer yields due to the potential for deposit flight. The EU Commission is considering revisiting this issue, though significant changes are unlikely,” Orchard stated.
A notable distinction between the U.S. and Europe regarding stablecoins is MiCA's stipulation that requires stablecoin deposits to be returned to the banking sector, whereas under the GENIUS Act, reserves can be maintained in U.S. government securities.
In this context, it is important to examine Qivalis, a coalition of banks and financial institutions aiming to create a euro-denominated stablecoin. Qivalis addresses EU regulatory concerns as its members are banks, thereby meeting internal reserve requirements and potentially countering U.S. dollar dominance, aligning with the EU’s strategic autonomy goals.
A significant challenge for the EU is the absence of a unified treasury bond market similar to that in the U.S. There was a proposal for a synthetic European safe asset, which would involve a stablecoin purchasing money market instruments from European governments, akin to how a GENIUS stablecoin acquires T-bills, according to Orchard from OMFIF.
“The Commission is reportedly considering revising reserve requirements to allow for a model similar to the GENIUS Act, where stablecoin operators could buy money market instruments from European governments instead of funneling funds back into the banking system,” Orchard added.
Moreover, European regulators are deliberating how to classify multi-issuance stablecoins, like Circle's (CRCL) USDC, which can be minted by various legal entities across different jurisdictions but presented to users as a single token.
When MiCA was initially developed, supporting multi-issuance models was a clear intention of the European Commission, as noted by Catarina Veloso, director of regulatory and compliance at Notabene, a protocol aimed at integrating crypto transactions into everyday commerce. However, during implementation, various EU stakeholders, including the ECB, expressed concerns regarding the associated risks.
According to Veloso, the true advantage of stablecoins lies in their global nature. Imposing geographic restrictions could lead to Circle Europe, which is now licensed under MiCA, needing to create a fragmented version of USDC for the European market.
“One of the main benefits of stablecoins is that they are not limited to a payment system confined to a specific jurisdiction,” Veloso stated in an interview. “Regulatory frameworks that enforce borders would dilute this value.”
Centralized Oversight Discussion
In addition to stablecoins, another significant topic is the potential for more centralized oversight of MiCA under the European Securities and Markets Authority (ESMA).
This centralization could eliminate inconsistencies in national rule implementations, yet it also raises the possibility of creating a bureaucratic entity that might hinder the evolving industry. Some observers within the European Commission have suggested that this centralization might be premature.
“Currently, the supervision of MiCA is spread across National Competent Authorities like BaFin and others; if changes are to be made, the regulation will need updating,” Orchard explained. “Given the need for revisions, they are taking the opportunity to explore other areas for improvement, including the distribution of responsibilities between MiCA and MiFID [Europe’s Markets in Financial Instruments Directive].”
Bringing the discussion back to business needs in Europe, Denzel Walters, head of Luxembourg at crypto trading firm B2C2, highlighted the expertise available in Luxembourg’s relatively small market, which facilitates the distribution of services not just across Europe, but globally.
“From a business perspective, there are numerous reasons why we opted to establish our European presence in Luxembourg, and whether the regulator is national or European, we hope those advantages will continue,” Walters stated in an interview.
“Ultimately, the goal should not merely be regulation itself,” he emphasized. “The focus must be on enabling businesses to thrive.”
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