MoonPay and 4 other exchanges have been awarded MiCA licenses

MoonPay, BitStaete, ZBD, and Hidden Road have acquired Markets in Crypto Assets (MiCA) licenses from regulators in the Netherlands to operate within the EU region. These licenses allow them to function across the 27-member bloc counties. A December 30 filing from the Dutch Authority for the Financial Markets (AFM) confirmed the four approvals. 

MoonPay CEO and co-founder Ivan Soto-Wright highlighted the importance of the green light, stating, “MiCA represents a pivotal moment for the European digital asset industry, and we’re proud to have worked collaboratively with the Dutch AFM to be among the first to embrace this new regulatory framework.”

MiCA aims to create a standardized regulatory environment for cryptocurrency firms across Europe. The rulebook includes the Crypto Asset Service Provider (CASP) license, which allows companies approved in one member state to operate throughout the EU.

MoonPay meets MiCA requirements as companies seek approval

The regulatory financial legislation began its two-phase implementation on June 30, 2024, covering stablecoins. They are referred to under MiCA as “Asset Reference Tokens” and “E-Money Tokens.” The December 30 deadline extended these rules to all other regulated tokens, coins, and CASPs.

BitStaete, a digital asset management company; ZBD, a bitcoin lightning fintech platform; and Hidden Road, a prime brokerage and clearing firm, also gained Dutch CASP licenses. The approvals allow the companies to expand operations under the EU’s unified regulatory framework.

Meanwhile, Socios.com, a fan engagement platform, announced its authorization from Malta’s Financial Services Authority (MFSA). The company secured a Class 3 Virtual Financial Assets Act (VFAA) license to operate as a regulated service provider.

Stricter rules will impact market activity: Economists debate

MiCA’s regulations are widely considered comprehensive, but some provisions have raised concerns about operational costs and market dynamics. Small stablecoin issuers, for example, must hold at least 30% of their reserves in low-risk EU-based commercial banks. 

Large market cap players like Tether and Circle face stricter mandates, requiring them to maintain 60% or more of their reserves in similar institutions. While the laws were created to ensure market stability, they could increase costs for firms, potentially impacting financial viability.

Concerns about regulatory overreach persist, particularly among smaller startups struggling to meet MiCA’s requirements. Some economists have hailed the regulatory framework as a major step forward. However, chatter around the region suggests trading conditions might be too stringent. There are also concerns that it will eventually drive away businesses to more “business-friendly” jurisdictions. 

Agne Linge, head of growth at decentralized finance platform WeFi, shed light on the prospective strain on small-scale stablecoin companies. “For smaller stablecoin issuers, maintaining 30% reserves in EU banks is financially burdensome,” Linge said.

Uldis Teraudkalns, Chief Revenue Officer at cryptocurrency exchange Paybis, predicts significant fallout. “The new regulations will drive companies to look for jurisdictions with more favorable regulatory frameworks,” he told news outlet Arabian Business. “The UAE is emerging as a preferred destination due to its crypto-friendly policies and stable regulatory environment.”

Dmitrij Radin, founder of Zekret and CTO of Fideum, emphasized the regulation’s potential to mature the market. “Long-term, every regulation helps us mature the market. It will drive more funds and more users,” he said in a recent interview, at Emergence Prague.

However, Radin also noted MiCA’s focus on identifying “weak points of control” in the crypto space, which could breed heightened scrutiny for retail investors and end-users of crypto platforms. 

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