Urgent Warning: MiCA Fragmentation Persists Across EU, Says Bitpanda Exec

The implementation of MiCA, the landmark EU crypto regulation, is underway, promising a harmonized landscape for digital assets. However, according to industry insiders like Bitpanda, the reality on the ground reveals persistent challenges, particularly concerning regulatory fragmentation across member states. This uneven application impacts businesses striving for seamless operations across the bloc.

Understanding MiCA and Its Promise

MiCA (Markets in Crypto-Assets Regulation) was designed to provide much-needed clarity and a unified framework for crypto businesses operating across the European Union. Before MiCA, companies faced the complex task of navigating up to 17 different national licensing regimes, creating significant hurdles and inefficiencies. Benedikt Faupel, head of public affairs at Bitpanda, acknowledges MiCA’s success in simplifying this by introducing a single, overarching framework. He noted this was a major step forward from the previous fragmented landscape.

Why Regulatory Fragmentation Still Exists

Despite MiCA’s intent, achieving true harmonization in practice remains a challenge. Faupel points out that regulatory fragmentation persists due to differing interpretations and enforcement approaches by national regulators. He explained that some countries conduct extensive institutional examinations for crypto licensing applications, while others are less stringent unless specific issues arise. This creates an uneven playing field, impacting businesses operating across borders and making consistent compliance difficult. While this fragmentation is expected when regulating a new field like crypto, it’s an issue the industry must address.

Bitpanda’s Experience with Crypto Licensing

As a prominent Austrian crypto exchange founded in 2014, Bitpanda has actively sought and obtained multiple MiCA licenses across the EU. Faupel notes that Bitpanda is currently unique in holding three such licenses. Their direct experience highlights the practical implications of regulatory fragmentation, demonstrating the variations in how different jurisdictions apply the MiCA framework during the crypto licensing process. Bitpanda’s expansion, including gaining FCA approval in the UK and a MiCA license in Germany, showcases their navigation of this evolving landscape.

Improving EU Crypto Regulation Implementation

While MiCA is largely seen as a positive step for EU crypto regulation, there’s room for improvement in its practical implementation. Faupel suggests refining reporting requirements, noting that regulators sometimes appear to request vast amounts of data without a clear purpose upfront. Bitpanda actively engages with EU lawmakers and national regulators to educate them and help mature the European crypto market, advocating for closing the gap caused by regulatory fragmentation and ensuring a more consistent approach.

MiCA has undeniably brought a necessary level of regulatory clarity to the EU crypto landscape. However, the path to full harmonization is ongoing. As highlighted by Bitpanda’s experience, regulatory fragmentation in enforcement presents practical challenges for businesses seeking to operate seamlessly across member states. Continued dialogue between the industry and regulators is crucial to refine implementation, ensuring a level playing field and fostering responsible growth for EU crypto regulation.