MiCA's launch in Europe's encryption industry welcomes a "major reshuffle": High regulatory thresholds may spawn a new wave of mergers and acquisitions

The battle phase for the EU's Cryptographic Asset Markets Regulation Act (MiCA) is coming to an end, but the real challenges companies face are just beginning. The high cost of continuing to operate a compliance system could change the landscape of the European crypto industry. In the future, the focus of industry competition may shift from "who can obtain a license" to "who can bear the cost of supervision", and promote enterprises to achieve large-scale development through mergers and acquisitions, joint ventures or cooperation with banks. With the gradual implementation of MiCA and the imminent formation of the UK's crypto regulatory framework, the European crypto industry is entering a new stage of integration. Industry insiders believe that high-standard regulatory requirements may drive a new wave of mergers and acquisitions, and cooperation between crypto-native companies and traditional financial institutions will further deepen. This trend may be more obvious in the UK market. The UK's Financial Conduct Authority (FCA) is developing a new regulatory framework for crypto assets, which is expected to incorporate the crypto business into the existing financial services regulatory system, exposing it to similar capital, operational and customer asset protection requirements to traditional investment institutions. Steven Lightstone, partner in Morgan Lewis 'London office and co-head of the global fintech team, said the FCA wants to promote market competition and support new entrants, but its regulatory standards will be very strict when it comes to consumer protection. Unlike the EU's independently operated MiCA framework, the UK plan would directly use the existing financial regulatory system to manage crypto companies. At the same time, increased regulatory certainty is driving European banks to accelerate their entry into the digital asset space. SygnumEurope CEO Simon Schneider said that currently less than 20% of banks in Europe still provide crypto-related services, and there is a huge gap in the market. MiCA's greatest value is not just to create a new licensing system, but to provide legal certainty for financial institutions to enter the digital asset market. He cited Switzerland as an example and pointed out that after the launch of the distributed ledger technology regulations, most large Swiss banks have begun to provide digital asset services, and other regions in Europe may replicate this path in the future. In the future, banks will not necessarily replace crypto-native companies, but are more likely to rely on professional Infrastructure services providers to cooperate in areas such as custody, brokerage, pledge, and asset tokenization. As companies that fail to obtain MiCA licenses gradually withdraw from the European market, assets may be further concentrated in regulated institutions. However, Schneider believes that the self-hosting model and the institutional hosting model will still coexist for a long time. Industry insiders believe that the European crypto industry is entering a "regulatory-driven integration cycle." For crypto start-ups that have relied on rapid innovation and asset-light models in the past, the core competitiveness in the future may no longer be just technical speed, but compliance capabilities, capital scale and financial infrastructure integration capabilities.