Several EU countries are facing challenges in implementing the Markets in Crypto Assets (MiCA) regulation by the end of the year. These countries include Belgium, Italy, Poland, Portugal, Luxembourg, and Romania, according to a recent document shared with CoinDesk.
Last month, various crypto industry associations expressed their concerns in a letter to the European Securities and Markets Authority (ESMA). They highlighted that national regulators will struggle to handle applications from crypto asset providers under the current time constraints.
MiCA is set to take effect at the end of this year. However, with just three weeks left, nearly a quarter of the 27 EU member states are not ready.
To enforce MiCA, EU countries must align their local laws with the regulation. The Electronic Money Association confirmed that the countries lagging behind include Belgium, Italy, Poland, Portugal, Luxembourg, and Romania.
Industry representatives believe that the European Commission and ESMA are not taking this situation seriously. They are sticking to the year-end deadline even though many countries are unprepared.
Robert Kopitsch, co-founder of Blockchain for Europe, stated, “The implementation of MiCA into national law is not going the way it should.”
The MiCA implementation process has two phases. The first phase, which took place in June, required stablecoin issuers to obtain the necessary authorization to operate. The second phase, due by December, involves crypto asset service providers (CASPs) like exchanges and wallet providers. These firms must be registered in at least one EU country to apply for a MiCA license that allows them to operate across the bloc.
Trade associations point out that a major issue for national regulators, known as the national competent authority (NCA), is the limited time between the deadline and the finalization of certain regulatory standards in October. This leaves just two months to deal with the necessary paperwork and complexities.
In their letter to ESMA, they emphasized that the time pressure makes it difficult for the NCA to process CASP applications effectively. This is crucial for establishing a solid regulatory framework.
The trade groups have asked for a six-month “no-action” period. This would prevent enforcement actions against firms that have not yet received authorization. So far, ESMA has denied this request. However, the upcoming meeting on December 11 may provide some guidance on timing. ESMA has not commented on the situation.
Due to the impending registration backlog, some firms might have to pause their crypto operations. Kopitsch mentioned, “If you don’t have a license by a certain date, you need to stop your services in Europe.” This could negatively impact businesses and frustrate users.
Countries like Ireland, Portugal, Poland, and Spain are struggling to meet the deadline. Italy, Malta, Cyprus, Lithuania, and Belgium have also been mentioned as facing challenges.
Even Germany, which has a relatively advanced regulatory framework for crypto assets, is experiencing difficulties. The Electronic Money Association noted that Germany needs new legislation to meet MiCA specifications, which can take time. Malta also requires adjustments to its crypto regime to comply with MiCA.
Helmut Bauer, a consultant with the Electronic Money Association, explained, “It’s a political process and a legislative process.” He noted that delays in this process have affected Germany. While BaFIN, Germany's financial regulator, is prepared, it must wait for the necessary legislation.
National regulators have pointed to the legislative process as a bottleneck, citing delays from their governments. In Poland, the Financial Supervision Authority (KNF) stated that the Ministry of Finance is coordinating the process and is responsible for meeting deadlines. The KNF confirmed that the draft Polish act on the crypto-asset market has received a positive opinion regarding compliance with EU law and is currently being reviewed by the European Affairs Committee.
The Portuguese Securities Market Commission mentioned that the legislative proposal to implement MiCA responsibilities is under consideration by the Portuguese government. Belgium’s FSMA stated that it cannot provide input until a political decision on the designation of competent authorities for MiCA is made.
The Central Bank of Ireland encourages early engagement from applicants and is involved in pre-application processes with various firms seeking MiCA authorization. A spokesperson noted that the progress of a firm through the CASP application process depends on its nature, scale, complexity, and preparedness.
Italy’s financial regulator, CONSOB, directed inquiries to ESMA regarding the current situation.
Germany, Spain, Malta, Cyprus, Lithuania, Luxembourg, and Romania did not respond by the time of publication.