As MiCA is implemented and the U.K. finalizes its crypto regulations, strict oversight could lead to an increase in mergers, acquisitions, and collaborations with banks.
By Jamie Crawley, AI Boost|Edited by Stephen Alpher Jul 26, 2026, 10:00 a.m. 3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Europe (652234/Pixabay)SummaryShow- Europe's MiCA initiative has advanced regulatory measures beyond just licensing, raising questions about the sustainability of smaller crypto firms under long-term compliance costs.
- Legal experts indicate that the U.K.'s proposed regulations may be equally challenging as MiCA, integrating crypto firms into the current financial services framework instead of creating a separate one.
- Established banks, which already possess compliance systems, could be significant beneficiaries through mergers, partnerships, and institutional crypto services.
While the rush for Markets in Crypto Assets (MiCA) licenses may have subsided, the comprehensive regulatory framework is entering a new stage that may significantly alter the landscape of crypto ownership.
Companies are now grappling with the ongoing expenses associated with operating under rigorous regulations, indicating that the forthcoming phase may be characterized not by licensing achievements, but by mergers and collaborations between crypto firms and traditional financial institutions.
This trend could accelerate in the U.K., where the Financial Conduct Authority's (FCA) proposed crypto regulations are anticipated to set standards similar to MiCA, incorporating crypto activities into the existing financial services regulatory framework.
"The FCA is attempting to foster competition and assist newcomers," stated Steven Lightstone, a partner at Morgan Lewis' London office and a co-leader of the firm's global fintech team. However, he noted, "the standards are very high, especially with consumer protection in mind."
In contrast to the EU's separate MiCA framework, the U.K.'s proposals aim to assimilate crypto firms into the same regulatory structure that governs conventional financial institutions. This means that businesses will be subject to familiar prudential, operational, and client asset requirements rather than a distinct crypto framework.
"Since it relies on existing regulations, it will resemble less of a standalone framework," Lightstone explained. "A crypto firm will be regarded like any other traditional financial entity," adding that "obtaining FCA authorization will still be challenging."
For established banks and investment firms accustomed to these regulations, adapting to the crypto landscape may be relatively easy. In contrast, newer crypto companies may face substantial challenges in developing governance, capital, and custody systems from the ground up.
This difficulty is particularly highlighted by the FCA's proposed client asset framework, which mandates that firms separate customer crypto assets from company funds under trust arrangements while implementing crypto-specific operational safeguards concerning private keys and reconciliations.
"The CASS requirements are quite burdensome," Lightstone remarked. "This could prompt newcomers to merge with or be acquired by a traditional firm already subject to CASS and possessing these controls."
Banking Adoption
The potential for consolidation arises as banks are increasingly open to exploring digital assets now that regulatory ambiguities are beginning to clear.
"Currently, fewer than 20% of banks in Europe offer any form of crypto services, indicating a significant gap in the market," noted Simon Schneider, CEO of Sygnum Europe.
Schneider asserts that MiCA's most significant impact is not merely the establishment of new licensing categories but the legal certainty it provides to financial institutions that has been lacking.
He cites Switzerland as a model. Following the introduction of the nation's distributed ledger technology legislation several years ago, the adoption of crypto by major Swiss banks surged. Today, around 75% of the leading banks in Switzerland offer digital asset services, a trend Schneider believes Europe could eventually emulate.
Rather than entirely replacing crypto-native firms, banks are more inclined to depend on infrastructure providers for custody, brokerage, staking, and tokenization services. Sygnum has increasingly shifted its focus towards providing regulated digital asset infrastructure to financial institutions instead of competing for retail clientele.
"We observe a clear trend towards regulated institutions," Schneider commented. "Banks already have established relationships, distribution networks, and the compliance frameworks in place."
The executive anticipates that assets will gravitate towards regulated providers as firms unable to secure MiCA licenses cease operations in parts of Europe, although he believes that both self-custody and institutional custody will continue to exist side by side.
"We will continue to have both concepts," Schneider said. "However, there is a clear trend towards regulated institutions."
As the U.K. edges closer to implementing its own crypto framework, this trend may intensify. While the proposals aim to foster innovation, they also reflect a broader regulatory trend across Europe: one where success hinges not solely on technological advancements but on the capacity to function as a regulated financial institution.
For an industry that has thrived on agile startups challenging established players, the next competitive edge may not be speed but rather scale.
UKMiCAAI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.Latest Crypto News- 1Shiba Inu surges 36% as South Korean traders fuel mystery rally3 hours ago
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Markets repositioned since June, but Binance held share (~55% user funds, ~24% spot) and drew net inflows in early July while the tracked market saw outflows.
By CoinDesk ResearchJul 22, 2026Markets repositioned since June, but Binance held share (~55% user funds, ~24% spot) and drew net inflows in early July while the tracked market saw outflows.
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