Crypto firms seek stablecoin, DeFi reforms in MiCA 2.0

The European Commission opened a public consultation in May to gather feedback on changes to the Markets in Crypto Assets (MiCA) framework. The comment period runs through Aug. 31 and the Commission says responses will inform later legislative proposals. Full application of MiCA began on Dec. 30, 2024, and the first licences were issued in early 2025.

The consultation is split into four areas: clarifying which crypto assets fall outside the current asset-referenced tokens (ARTs) and e-money tokens (EMTs) categories; updating rules for EMTs, ARTs and their issuers; defining a legal framework for crypto-asset service providers (CASPs); and covering topics not addressed in the first law, including decentralized finance and prediction markets.

Stablecoins are a central topic in the consultation. Regulators are weighing whether stablecoins should be regulated primarily as trading instruments, with a focus on investor protection and market integrity, or as payment infrastructure, which would bring rules on redemption, liquidity management, reserve composition, operational resilience and supervisory reporting. Catarina Veloso, director of regulatory and compliance at Notabene, noted that policy choices will depend on how stablecoins are used — for retail payments, wholesale settlement or cross-border transfers — and by whom.

Market participants want rules that make euro-denominated stablecoins more competitive. Katie Harries, director and head of policy for Europe at Coinbase, urged changes to reserve rules, to allow a larger share of reserves in high-quality sovereign assets, and to permit non-interest incentives such as cashback and loyalty programmes. Under current MiCA EMT rules, issuers are barred from offering interest, a restriction industry participants say affects the appeal of euro stablecoins.

DeFi platforms and the legal status of decentralized protocols are also under review. MiCA does not apply to CASPs that operate without a central intermediary. Regulators are seeking indicators to decide when a protocol is sufficiently decentralized to be exempt, including control over the protocol, governance rights, admin keys, front-end control, revenue capture, upgradeability and whether identifiable individuals can influence outcomes. Miroslav Đurić, senior associate at Taylor Wessing, pointed out that many CASPs already connect customers to DeFi platforms and regulators are considering whether CASPs should perform due diligence on those platforms or only link clients to certified protocols under a new regime.

Prediction markets are part of the consultation as well. The Commission asks whether these markets provide economic benefits and whether they should fall under MiCA or the Markets in Financial Instruments Directive. Đurić said classification will depend on the nature of the contracts offered and warned that operators could become subject to different rules ranging from MiFID II to national gambling laws.

Industry groups say they will remain engaged with Brussels through the consultation. Harries called for continued dialogue among industry, policymakers and regulators to refine areas where the regulatory framework needs clarity or flexibility. Legal advisers expect the legislative process to be slow and technical, with concrete proposals unlikely before 2028 given the complexity of the issues and the usual pace of EU lawmaking.