Europe’s Crypto Firms Face Higher Compliance Costs as MiCA and U.K. Rules Take Shape

The European Union’s Markets in Crypto-Assets regulation is nearing the end of its contest phase, but firms are now confronting the cost of maintaining compliance systems. According to Odaily, the expense of sustaining those systems could reshape Europe’s crypto industry, shifting competition from obtaining licenses to bearing regulatory costs.

Industry participants said companies may seek scale through mergers and acquisitions, joint ventures, or partnerships with banks as MiCA is implemented and the U.K.’s crypto regulatory framework takes form. They said tighter standards could also drive more consolidation and deepen cooperation between crypto-native firms and traditional financial institutions.

In the U.K., the trend may be more pronounced as the Financial Conduct Authority drafts a new crypto-asset framework. Morgan Lewis London partner and global fintech co-head Steven Lightstone said the FCA wants to promote competition and support new entrants, while maintaining strict standards in consumer protection. He said the U.K. approach will use the existing financial regulatory system to oversee crypto firms.

At the same time, greater regulatory certainty is encouraging more European banks to enter digital assets. Sygnum Europe CEO Simon Schneider said fewer than 20% of European banks currently offer crypto-related services. He said MiCA’s main value is not only a new licensing system, but also legal certainty for financial institutions entering the digital asset market.

Schneider said that after distributed ledger technology rules were introduced in Switzerland, most large Swiss banks began offering digital asset services, and he said other parts of Europe could follow that path. He also said banks are more likely to work with specialized infrastructure providers in custody, brokerage, staking, and asset tokenization than replace crypto-native firms.

Schneider said self-custody and institutional custody models are likely to coexist over the long term. Industry participants said Europe’s crypto sector is entering a regulation-driven consolidation cycle, with compliance ability, capital scale, and financial infrastructure integration becoming key factors.