ByCoinGape
MiCA: July 1 marks a defining moment for Europe’s crypto industry. With the transition period coming to an end, crypto businesses operating across the European Union are now expected to comply with the Markets in Crypto-Assets (MiCA) regulation.
This is going to usher in one of the biggest regulatory shifts the digital asset industry has seen.
For many firms, today’s deadline represents the culmination of years of preparation. But according to Peter Kerstens, one of the principal architects behind MiCA, it should instead be viewed as the beginning of Europe’s next chapter in digital asset regulation.
In a conversation with Block of Fame, Kerstens reflected on MiCA’s biggest achievements, why regulatory clarity is becoming the industry’s biggest competitive advantage. He also explains why Europe is already preparing for a crypto market that has evolved well beyond the one MiCA was originally designed for.
Much of the conversation around MiCA has centred on stablecoins. Kerstens believes that focus overlooks the regulation’s biggest contribution.
“Personally, and this is my personal view, I think that the parts in MICA that deal with crypto asset service providers are actually much more important.”
He argues that most users interact not with stablecoin issuers, but with exchanges, custodians, brokers and trading venues. Bringing these businesses under a common regulatory framework, he says, is what creates confidence in the ecosystem.
“To create legal certainty, but also to create trust among the user base, you really have to make sure that these people treat their customers correctly, that they are subject to prudential and conduct regulation just like any other financial services provider is subject to prudential and conduct regulation.”
Ultimately, Kerstens believes MiCA’s greatest success has been legitimising the industry.
“I think that really sort of mainstreaming the digital asset ecosystem and moving it from a bit of a shadowy environment into the regulatory sunlight, I think is the main achievement of MICA.”
MiCA is set to expire its deadline today leaving key crypto firms unauthorised. Although MiCA reaches full implementation today, Europe is already examining what comes next.
Peter informs that the European Commission recently launched a MiCA consultation review to assess whether the framework should evolve alongside the market. “If we do need to update MiCA, we need to start now” becaused it takes 2-3 years for legislative work, he reasons.
However, Kerstens is clear that this is not because MiCA has failed.
“MICA is working very well, but MICA was designed, as I mentioned, in 2018, 2019 at a time when crypto markets looked very differently from what they look now.”
He says the market has expanded far beyond what policymakers anticipated when the regulation was first drafted.
“When MiCA was designed, there were no NFTs. When MiCA was designed, there were no meme coins. When MiCA was designed, there were no perpetual futures. When MiCA was designed, there were no prediction markets on blockchain.”
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Rather than allowing regulation to fall behind innovation, Europe wants to stay ahead of the curve.
“The reason why we did this consultation… is to make sure that our regulatory framework that we have is fit for purpose and reflects market realities because the markets are moving and takes account of regulatory developments in the rest of the world.”
Beyond stablecoins, Kerstens believes tokenization represents the biggest long-term opportunity for the industry.
“My personal view is that everything can be tokenized. I think that everything will end up being tokenized. How long it will take, it depends.
Current financial markets, while they operate, have huge inefficiencies when it comes to clearing and settlement and capital lockup and capital use in these processes. So they want to become more efficient through tokenization.
While the transition will not happen overnight, he believes the direction is inevitable.
“While it may not all happen next year or in 2 years’ time, I think the world, the financial world will look very, very differently in 5 to 10 years’ time.”
He also shares key insights on where these key market would be emerging. According to him, the financial centres of this $58 billion tokenized world will be in Asia.
“The financial centres of the world will be in India, in China, and Southeast Asia because the dynamics I see in those markets are so much more powerful than the dynamics I see in Europe.
They can go straight into tokenized assets, so there’s a huge opportunity. I think that in Europe, and in the US, we have to be extremely vigilant of this because otherwise we are no longer going to be the financial centres of the world.
And this is a good thing because this leads to positive competition. Not unfair competition but positive competition. Who can do this best?”
As institutions increasingly explore digital assets, Kerstens believes regulatory certainty will remain one of Europe’s biggest advantages.
He expects policymakers to spend the coming years focusing on tokenized financial instruments, while refining regulation only where genuine barriers exist.
“People often say, well, we’re not doing this because the law doesn’t allow us to do it. And then if I check into our rules, I see nowhere a prohibition or an inhibition.”
Rather than assuming regulation is the obstacle, he encourages market participants to identify specific provisions that need updating.
“If people say, well, look, we can’t do this because Article X, Y, and Z of that regulation prevents it, they have to come forward and tell us. They need to demonstrate that this doesn’t work and then we will try to resolve those problems.”
Despite concerns that implementation could vary across member states, Kerstens believes Europe’s biggest strength lies in building common rules across 27 countries. However, there are still member countries such as Poland who have vetoed MiCA.
He points to what political scientists call the “Brussels Effect.”
“It’s something which is called in political science the Brussels effect, meaning that while Europe may not be the most innovative place, it is the most innovative regulator.”
That consensus-building process, he says, is why Europe’s regulatory framework is increasingly influencing policymakers elsewhere.
“Once you’ve come to a solution that works for the 27, that means that it’s a compromise that takes account of all kinds of possible perspectives.”
Today, that influence is already visible beyond Europe. “We see MICA being emulated… across the world.”
Thus, for Peter Kerstens, July 1 is not the end of Europe’s crypto journey. It is the beginning of its next phase.
If MiCA established the foundation for regulated digital assets, its next challenge will be ensuring that the rulebook evolves just as quickly as the industry itself.
Sneha Agrawal More Stories
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