As the European Union launches its landmark Markets in Crypto-Assets (MiCA) framework, the core commitment to unify the market is already under pressure.

In the latest episode of Byte-Sized Insight, Cointelegraph explores whether MiCA can deliver on its promises.

The regulation aims to simplify the operations of cryptocurrency companies by introducing a single licensing system across all 27 member states. Once licensed in one country, companies can "passport" their services throughout the EU without having to deal with a patchwork of local rules.

However, less than a year into its implementation, national regulators, including those from France, Italy, and Austria, have expressed concerns that the passporting system may encourage companies to choose jurisdictions with looser regulations, a practice known as regulatory arbitrage.

"Regulatory competition in Europe is not new," said Jerome Castille, Head of Compliance and Regulatory Affairs at CoinShares.

Castille believes the issue is not a lack of rules but a lack of consistent enforcement. "Europe already has a very high level of investor protection, possibly the highest in the world," he explained.

For smaller companies, the launch process is particularly challenging. Marina Markezic, Executive Director of the European Crypto Initiative, pointed out that the capability gaps between regulators and the pace of new rules could push startups out of the market.

"Staying compliant in a very short time frame is extremely stressful," she said.

While MiCA is Europe's leading attempt at cryptocurrency regulation, its success will depend on whether the rules are applied uniformly across the EU.

As Markezic added, "There are 27 different national authorities overseeing the same regulation. Some are larger, some are smaller, some are more experienced, and some less so. This is really a test for Europe to see if we can supervise consistently."

Related: Bank of Canada calls for a stablecoin regulatory framework, or it will be "crushed"

Original article: “National Regulators Diverge on Passporting System, MiCA Faces Early Test”

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