Crypto Regulation as an Opportunity for Europe!

Last Updated: 21. November 2023By

The Markets-in-Crypto-Assets-Regulation (MiCAR) is bringing movement to the digital currency market in Europe. Institutional investors are particularly in demand as customers. It could become more difficult for fintechs to remain competitive in the future. These are the main results of a recent survey by PPI AG.

For the study, the software and consulting house PPI surveyed 31 experts and managers from companies in various industries dealing with crypto assets. In addition to banks and exchange operators, this also includes representatives of crypto service providers and fintechs. Two thirds of them assign high to very high relevance to the topic of crypto assets, which include well-known crypto currencies such as Bitcoin or Ethereum.

Above all, the regulation of MiCAR is occupying companies. The EU regulation, which came into force in June 2023 and will be fully effective by the end of 2024, is, according to the survey participants, by far the most important regulation in relation to crypto assets. Companies are hoping for competitive advantages in the business with crypto assets and an increase in their own attractiveness in the market through the implementation.

With the implementation of MiCAR, financial companies gain access to an enormous economic area with around 450 million consumers at once. In addition, MiCAR opens the door to other forms of innovative assets such as digital securities, according to PPI AG.

The high importance of MiCAR is also shown by the fact that almost half of the respondents already offer services that will be regulated by MiCAR in the future. These include the issuance of crypto assets, the safekeeping and administration of crypto assets for third parties and the exchange of crypto assets for nominal currencies (fiat money) such as the euro or the US dollar. Even among those participants who do not yet do so, around 60 percent want to expand their product range to MiCAR-relevant offers in the future.

Institutional customers are the most important target group. Anyone wishing to offer products and services related to crypto assets has to take MiCAR into account, according to further analysis. After all, already more than every second company has started or plans projects to implement it – and this, although many details of the regulation are still not finally clarified. Those who benefit are above all institutional investors, who are identified by 61 percent of the respondents as the most important customer group (private customers: 22.5%; corporate customers: 16%). A different picture emerges for fintechs, operators of crypto markets and crypto service providers: here, private customers and institutional investors are equally important as the most important customer group (each 40%).

This picture could change in the future, however. The reason for this are the strict MiCAR requirements. Already today, almost every second institution complains of a lack of free capacity and experts for the implementation. Especially for smaller companies such as fintechs, it could be difficult to meet the high MiCAR requirements. This creates the danger that they are pushed out of the regulated market for crypto assets.

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