MiCA full rollout shows muted impact as USDT, bitcoin dominance holds

The European Union's Markets in Crypto-Assets Regulation took full effect July 1, yet trading activity remained anchored to bitcoin spot markets and USDT-denominated flows, Kaiko Research data show.

"The market impact has looked far more like a quiet adoption than the structural shock many participants once anticipated," Kaiko Research said in a July 2 analysis. Of more than 3,000 crypto firms previously registered across the EU, only 244 had secured MiCA authorization by May, according to the European Securities and Markets Authority.

The regulation, which replaced fragmented national rules with a single EU-wide licensing system, forced thousands of firms to either obtain authorization or cease regulated services. Binance, the world's largest exchange by volume, was unable to secure approval before the deadline and has begun winding down services for EU customers, according to company statements. Among those that cleared the process is Barcelona-based Venga, which received Crypto-Asset Service Provider status from Spain's CNMV, unlocking passporting rights across all 27 member states.

The compliance burden has narrowed the field. Joseph Borg, a partner at WH Partners who has advised crypto firms since 2016, estimates the number of licensed operators could shrink to between 300 and 400, down from roughly 3,000 registered entities. "Regulators prefer having 20 operators to regulate rather than invest in more technology and more human resources to supervise more operators," Borg said. The consolidation raises questions about whether higher compliance costs will push smaller startups to jurisdictions such as Dubai, where regulatory requirements are less onerous.

$30M weekly volume, USDT dominance intact

The most visible market impact has been in EUR-denominated stablecoins. MiCA-compliant tokens — Circle's EURC and Societe Generale's EURCV — saw their combined market share reach 67% in October 2024, up from near zero before the regulation took effect, according to Kaiko data. Coinbase overtook Binance as the leading venue for EUR-stablecoin trading in August 2024.

Yet overall demand has not expanded. Weekly trading volumes for EUR-backed stablecoins have held at roughly $30 million since MiCA's implementation, well below the $100 million peak in March 2024. The shift in market share reflects exchange delistings rather than new user demand, Kaiko noted.

For USD-denominated stablecoins, the picture is similar. USDC, the largest MiCA-compliant USD stablecoin, saw its market share edge up to 12% from 10%. But Tether's USDT — which is not MiCA-compliant and faces delisting on Coinbase for European users — continues to dominate global trading. On Coinbase, USDT's share of BTC-USDT volume rose from 1% to more than 5% within weeks of its 2021 listing and stood at roughly 10% in the second quarter of 2024, even after the exchange merged its USD and USDC order books to boost liquidity.

Regulatory arbitrage and the DEX factor

Decentralized exchanges, which are not regulated under MiCA, could become a channel for continued USDT access. USDT remains the most liquid stablecoin across crypto markets, and its usage on Ethereum's largest DEX, Uniswap, has grown since the US regional banking crisis in 2023. USDC's share on Uniswap has fallen to about 55% from nearly 90% in 2022, after a sharp depeg following Silicon Valley Bank's collapse.

Lin Han, founder and CEO of Gate Group, said the framework only works if all participants follow the same rules. "If unregulated or unregistered platforms can still provide services, then it's not a level playing field," Han said. ESMA has warned firms against using reverse solicitation to circumvent the rules and has encouraged measures such as geo-blocking.

Mark Foster, EU policy lead at the Crypto Council for Innovation, said MiCA's success will be judged by its ability to attract investment and talent. "The EU can no longer rely solely on being first," Foster said. "The eventual success of MiCA will increasingly be judged not by its novelty but by its ability to continue to deliver on its original promise."

This article is for informational purposes only and does not constitute investment advice.