Mimo is under pressure to challenge national regulators to passports

As the European Union develops groundbreaking markets with its crypto (MICA) framework, the key promises of unified market laws are already under pressure.

In the latest episode of Byte size insightCointelegraph investigated whether Mica could meet that promise.

Promise and reality

The rules were designed to simplify the business of crypto companies by implementing a single licensing system in all 27 member countries. Licenses in one country allow businesses to “passport” services across the block without having to navigate a patchwork of local rules.

However, less than a year into practice, national regulators in countries, including France, Italy and Austria, have expressed concern that passports could encourage lighter surveillance in a practice known as regulatory arbitration.

“The regulatory competition in Europe is nothing new,” said Jerome Castill, Coinshare’s head of European compliance and regulatory issues.

“We saw retail platforms flocking to Cyprus and Malta under the Mifid. In Mica, this time we were expected to be different. But again, if companies choosing jurisdiction start to think that all licenses are equal, then the promise of a single market will disappear.”

According to Castille, the issue is not a lack of rules, but a lack of consistent implementation. “Europe already has a very high level of investor protection, perhaps the highest in the world,” he explained.

“The real problem right now is to ensure that MICA is fully implemented. Without formal guidance, national regulators are making their own calls: where divergence or regulatory rulings depart. When done right, the market will be safe and attractive to global players.

Related: Bitgo protects licenses to launch regulated crypto transactions in Europe

Big pond of small fish

For small businesses, deployment has proven particularly challenging. Marina Markezic, executive director of the European Crypto Initiative, noted that the capacity gap between regulators and the pace of new regulations could squeeze startups out of the market.

“It’s very intense to comply in a very short amount of time,” she said.

“For the biggest ones, having one access to the entire European Union market is really positive. But unfortunately, it’s a really big burden for small businesses and they may not survive this process.”

MICA was a European bid that led crypto regulations, but its success depends on whether the rules apply equally across the block.

Markezic added: “There are 27 different national authorities that oversee the same regulations, some are bigger, some smaller, some are more experienced, some are less.

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