In May, the European Commission launched a public consultation period to gather input on potential rules for the cryptocurrency and blockchain sectors.
This consultation will come before future updates and expansions to the Markets in Crypto Assets (MiCA) legislative framework. Some in the industry have already started calling the anticipated updated version “MiCA 2.0.”
Katie Harries, Coinbase’s director and head of policy for Europe, explained to Cointelegraph that there are several important areas where “adjustments could help ensure the framework stays competitive as digital asset regulation enters its next stage.”
With a revised version of the EU’s crypto legislation on the horizon, the industry is hoping for clearer regulatory guidance around DeFi, stablecoins, and tokenization.
MiCA was only the beginning
Full implementation and enforcement of MiCA rules kicked off on December 30, 2024, with the earliest licenses granted during the opening months of 2025.
Although the legislative journey was lengthy and intricate, the EU still succeeded in establishing a crypto regulatory framework ahead of the United States. According to Harries, “MiCA helped establish an early global standard for digital asset regulation and gave the EU a first-mover advantage.”
It marked a “crucial first step” for the EU, producing a “single, unified rulebook for crypto” across all member states. “It offered consumers stronger protection and greater transparency, while giving businesses the regulatory certainty needed to build, invest, and expand throughout the bloc.”
Harries noted that, from Coinbase’s perspective, MiCA laid the groundwork for the company to grow its European operations into “the next wave of adoption across both retail and institutional markets.”
Now, Brussels is preparing to fine-tune its landmark legislation. The consultation is divided into four segments:
- Regulatory scope and definitions for crypto assets other than asset-referenced tokens (ARTs) and e-money tokens (EMTs)
- Obligations for EMTs, ARTs, and their issuers
- Establishing the legal framework for crypto-asset service providers (CASPs)
- Areas that MiCA 1.0 did not address, such as DeFi and prediction markets
Stablecoin debate carries regulatory weight
According to Catarina Veloso, director of regulatory and compliance at Notabene, segment 2, which would impact stablecoins, is “the longest and arguably the most politically sensitive portion of the consultation.”
The ways in which stablecoins are used — whether as a mainstream retail payment tool, a wholesale settlement mechanism, or a “supplement to existing payment methods for cross-border transactions” — could significantly shape how stablecoin policy is crafted.
“If stablecoins are viewed primarily as crypto trading instruments, the emphasis will likely stay on investor protection and market integrity. If they are treated as payment infrastructure, then redemption rights, liquidity, reserve management, operational resilience, and supervisory reporting become far more central.”
The risks they pose “depend heavily on how they are used, at what scale, by whom, and in connection with which parts of the broader financial system.”
Harries shared that Coinbase would like to see MiCA 2.0 “make euro stablecoins more competitive by revising rules around reserves, rewards, and the multi-issuance model.” Permitting a larger portion of stablecoin reserves to be held in “high-quality sovereign assets could reduce risk without undermining safety.”
Another key issue is stablecoin rewards. At present, EMT issuers are barred from offering interest. However, according to Veloso, “this can undermine the competitiveness of euro-denominated stablecoins and push users either toward foreign-currency stablecoins or toward yield-generating structures outside the regulated perimeter.”
Harries argued that “MiCA should permit non-interest incentives such as cashback and loyalty programs, which are standard features across the payments landscape and help drive competition and consumer choice.”
Integrating DeFi and prediction markets into the framework
Currently, MiCA does not apply to CASPs that are fully decentralized and function without any intermediary. Veloso pointed out that, while this may sound straightforward, “decentralisation is rarely a black-and-white concept.”
To craft well-informed policy around DeFi, EU regulators need to determine how to evaluate whether a CASP is truly decentralized and “which indicators should carry weight: control over the protocol, governance rights, admin keys, front-end control, revenue capture, upgradeability, or the ability of identifiable individuals to influence outcomes.”
Miroslav Đurić, a senior associate at Taylor Wessing, noted that many CASPs already link their clients to DeFi platforms. But since these platforms fall outside MiCA’s scope, regulators are now considering “whether CASPs should fulfill their fiduciary duty to clients by performing due diligence on the DeFi platforms they make available to those clients.”
“The Commission appears ready to explore various approaches, including some that might only allow CASPs to connect their clients with DeFi platforms that have been certified under a new certification regime.”
Prediction markets are also a hot topic currently under consideration in the EU. At present, there is no unified regulatory structure, and prediction markets are prohibited in certain countries.
The Commission is soliciting input on whether these markets offer any economic value for consumers, and whether they should fall under MiCA or the Markets in Financial Instruments Directive (MiFID).
Đurić said this will hinge on the nature of the contracts themselves. “Depending on the event contracts available on the platform […] a platform operator could easily become subject to requirements under different, sometimes conflicting regulatory frameworks — ranging from MiFID II to gambling regulations to the MiCA regulatory framework.”
What lies ahead
Observers within the crypto industry say they plan to maintain open communication with Brussels throughout the process. Harries stated that an effective updated MiCA will require “ongoing dialogue between industry participants, policymakers, and regulators — drawing lessons from how the framework performs in practice and refining areas where greater clarity or flexibility can help fuel the next phase of growth across the region.”
The consultation window closes on August 31, but according to Đurić, the overall legislative process could stretch on for years.
“Given the degree of complexity of the issues raised in the consultation as well as the typical pace at which the EU legislative process advances […] it is difficult to expect that any concrete legislative proposals will be adopted before 2028.”
