MiCA, or markets in crypto markets regulation, aims to create bright-line rules in Europe to enable digital asset innovation. While not regulating digital securities, MiCA covers just about everything else, including stablecoin regulation. The EU wants to encourage the development of new products and services which may benefit from blockchain technology.
Recently, CI connected with Eli Cohen, General Counsel at Centrifuge, a firm that aims to enable real-world asset (RWA) tokenization. Founded in 2017, Centrifuge seeks to support the institutional adoption of digital assets – including digital securities.
We asked Cohen about MiCA and his opinion on the EU regulation. Cohen said that for MiCA, the most important and valuable step is the clear delineation of different types of tokens into different categories with pretty good definitions for asset-reference tokens, utility tokens, and security tokens.
“The stablecoin regime is also helpful and useful, but much will depend on the EU authorities’ ability and the resources to enforce the rules against third country exchanges which will be a major challenge,” stated Cohen.
He said that MiCA will boost tokenized securities as the rules become more evident, particularly with the availability of regulated and approved stablecoins.
“It is a bit early to make any judgments on MiCA authorizations and approvals, but as expected, there is already a wide range with some countries still yet to allow MiCA license applications (IE Bulgaria, Czechia),” Cohen shared.
The US has yet to approve regulations for digital assets and tokenization. While Congress has crafted legislation addressing the market, during the past four years, crypto regulation has died in the Democrat-controlled Senate. Cohen said he believes that creating bespoke crypto rules will remain a challenge in the US, even with crypto-friendly Republicans controlling both the House and the Senate.
“It won’t happen in 2025, but perhaps 2026. Congress will need to function at a higher level of cooperation than we have seen for many years to get this accomplished.”
At the same time, Cohen believes there is still much that the Securities and Exchange Commission can do during a Trump administration without Congress regarding interpretative guidance and rule-making. However, this will also take some time and will unlikely go into effect until 2026 at the earliest.
“New US crypto rules could impact the EU if it is felt that the US approach is simpler and more generous and the EU needs to react to maintain competitiveness,” Cohen said. “They [the EU] are already keeping a close eye on this.”
Cohen explained that MiCA will divide the stablecoin world into regulated and non-regulated stablecoins, each appealing to different segments. The broader availability of regulated stablecoins will help attract TradFi players, particularly from the EU, into the market. But the unregulated stablecoins will be the bigger market share by a long way for some time to come and this will cement the view especially by EU regulators of the lawless nature of the crypto markets.
“We are very much taking a wait-and-see approach to EU regulation (and specifically enforcement) and even more so UK regulation. We do expect 2025 to be a good year to continue progressing TradFi adoptions, something we have been working on since 2022.”
Cohen believes that all of this will take some time to implement and absorb and 2026 looks to be the better bet as to when we see a really big TradFi presence in the industry.
“Until then, the TradFi integration heavy lifting will remain in the Real World Asset (RWA) sector as it is today, and Centrifuge will continue to take the lead there.”