EU's MiCA Rules Have Had Little Influence on the European Crypto Market, Regulator Says

• Although MiCA is set to start taking effect at year-end, it has yet to lead to an increase in crypto-euro transactions, the European Securities and Markets Authority said.
• The level of euro-denominated crypto transactions has held steady at about 10% since the regulation became law last year.

The European Union's crypto asset regulation, which became law in 2023 and starts to take effect at year-end, has yet to spur any increase in euro-denominated crypto transactions, the bloc's securities regulator said.

"The announcement of the MiCA regulation has not caused an increase in euro volumes at the current juncture but could constitute a potential growth driver once implemented in 2024, as it is intended to enhance investor protection," the European Securities and Markets Authority said in a report published Wednesday.

The 27-nation trading bloc was one of the first regulatory regimes to introduce a comprehensive rulebook for crypto assets, the Markets in Crypto-Assets law. The rules cover crypto assets and stablecoins, with stablecoin provisions set to kick in six months after the others.

Worldwide, fiat-to-crypto trading volumes fell to 20% in 2023 from 30% in 2021 because of the crypto winter, the report said, though the market has since recovered. This is partially due to the rise in popularity of stablecoins, which are digital assets whose value is pegged to assets like national currencies and allow investors to change their exposure without leaving the crypto ecosystem.

Around 80% of on-ramp and off-ramp transactions, that is those entering or leaving the crypto environment, involve the U.S. dollar or the South Korean won. The euro's "minor role" – a share of 10% – has not changed since the announcement of MiCA, the report said.

Stablecoins form part of over 60% of all crypto transactions, ESMA said in its report. Some 10 exchanges process about 90% of trades, and the largest exchange, Binance, accounts for almost half of global trading volumes, the report said.

Read more: MiCA, EU’s Comprehensive New Crypto Regulation, Explained