EU's Efforts for Unified Regulation May Push Crypto Innovation Overseas

The European Union is preparing to strengthen its regulatory control over financial markets, introducing new rules that will impact both conventional stock exchanges and the fast-growing crypto industry. Central to this initiative is an effort to resolve overlapping regulations and minimize inconsistencies among EU countries, though this strategy has ignited controversy over whether it could hinder innovation and reduce competitiveness.

One major complication arises from the overlap between two regulatory systems: the Markets in Crypto-Assets (MiCA) regulation and the Payment Services Directive (PSD2). Starting March 2026, stablecoin companies will be required to obtain both a MiCA crypto license and a separate payment services license for identical functions, such as holding and transferring euro-pegged stablecoins, according to

. Industry experts caution that this duplication could lead to significant compliance challenges. For instance, firms will need to satisfy combined capital requirements of €250,000-€125,000 under MiCA, plus an extra €125,000 under PSD2, in addition to higher operational expenses from managing two sets of regulations. Patrick Hansen, who leads EU policy at Circle, described the situation as a “regulatory own goal,” suggesting it contradicts MiCA’s original intention of harmonized oversight.

In response to these issues, the European Banking Authority (EBA) issued a No Action Letter in June 2025, providing a transition period until March 2026 for companies to adjust. Nonetheless, some critics argue that this extension does not go far enough to address deeper problems, and the EBA itself has admitted that the overlapping rules are redundant.

At the same time, the European Commission is moving forward with a wider plan to bring financial market infrastructure oversight—including both stock and crypto exchanges—under the authority of the European Securities and Markets Authority (ESMA). This proposal, which is expected to be officially unveiled in December, is intended to reduce regulatory inconsistencies and simplify supervision of cross-border operations, according to

. While Germany and France are backing the plan, nations such as Luxembourg and Ireland have voiced concerns that centralizing oversight could undermine the competitiveness of their own financial sectors.

The MiCA regulatory framework is already being implemented, with ESMA set to launch a temporary register of crypto-asset white papers and service providers by December 2024, as noted on

. This register will list both approved and non-compliant firms, aiming to boost transparency in the industry. However, since the system will depend on weekly updates from national regulators, some have questioned how timely and effective it will be.

The EU’s regulatory efforts underscore a broader challenge: finding the right balance between fostering innovation and ensuring investor protection. Supporters believe that more centralized and rigorous oversight will enhance trust and stability, while opponents worry that greater complexity could discourage investment and prompt companies to relocate to more flexible markets. With the December 2026 deadline approaching, the results of these discussions will play a crucial role in shaping the future of finance in Europe.