The European Union’s Markets in Crypto-Assets (MiCA) regulation, designed to create a harmonized regulatory landscape for digital assets across member states, is encountering significant resistance from national regulators. Central to MiCA’s framework was the introduction of a ‘passporting’ mechanism, allowing licensed crypto firms to operate seamlessly across all 27 EU nations with a single authorization. However, less than a year after its implementation, divergent interpretations and enforcement approaches at the national level are challenging this core principle. Industry experts and legal analysts report that certain national authorities are imposing additional, non-harmonized requirements on firms seeking to utilize their MiCA license in other jurisdictions. This development is creating a complex web of compliance obligations, undermining the regulation’s goal of reducing fragmentation. The emerging discrepancies are fueling concerns over potential regulatory arbitrage, where firms might seek authorization in jurisdictions with perceived lighter touch enforcement. Furthermore, this lack of uniformity is generating profound market uncertainty, potentially stifling innovation and deterring investment within the EU’s digital asset space. Stakeholders are calling for enhanced coordination among national competent authorities to ensure the regulation fulfills its promise of a truly unified and predictable market.
