With Europe's Markets in Crypto-Assets Regulation (MiCA) taking full effect this December, crypto firms are closely monitoring the European Union's new rules. The comprehensive framework for crypto assets promises long-awaited legal clarity and investor protection, positioning the EU as a pioneer in global crypto regulation. MiCA's rollout is expected to have long-term impacts on the crypto industry, potentially influencing regulatory approaches worldwide.
Uldis Teraudkalns, who recently joined crypto exchange Paybis as Chief Revenue Officer, spoke to TheStreet Crypto about Europe's MiCA regulations. The conversation delves into Norway's recent support for MiCA, and the challenges countries like Norway may face in attracting crypto firms, given their high costs and taxes. Teraudkalns also discussed how MiCA's stringent licensing and compliance requirements might drive some firms to seek alternative jurisdictions.
TheStreet Crypto: Do you anticipate that stringent compliance measures could drive smaller crypto firms out of the EU, and if so, which jurisdictions might benefit from this?
Uldis Teraudkalns, Chief Revenue Officer, Paybis: The new regulations will definitely drive smaller – and even some larger firms – out of the EU, as they require not only compliance but also a significant increase in the investments companies must make to meet these requirements.
The prime benefactors could be the near-EU jurisdictions, like the U.K. and Switzerland, depending on how the regulatory regimes develop there.
One thing to keep in mind is that access to the common EU market still remains a valuable asset, so the potential for migration within the EU to more progressive and cost-efficient jurisdictions is to be expected – and is already happening.
Despite Norway not being an EU member, it is part of the European Economic Area (EEA) and has expressed support for MiCA. Can you talk to us about the implications of this?
Teraudkalns: Norway has to understand that its extremely high costs will make it hard to attract business from the EU. I would even argue that combined with its aggressive capital and wealth tax system, it will struggle to keep even local entrepreneurs building in Norway.
If Norway adopts MiCA the same way the EU does, then it does not provide any advantage over other jurisdictions. On the contrary, besides potential access to the common EU market via passporting, this approach would provide little benefits.
Where Norway and similar jurisdictions can truly win is to provide a competitive alternative to the EU regime, similar to what Switzerland is doing. More tailored regulation and lighter overhead costs, in combination with access to superior infrastructure, can truly make a difference and motivate companies to stomach the extra spending on the general cost of doing business in a more expensive jurisdiction. However, the tax concerns [in Norway] will still loom large over any innovation in the fintech and crypto fields.
How significant is Norway’s endorsement for the broader adoption of MiCA across Europe?
Teraudkalns: The EU MiCA train has been rolling for a few years already, so there are no changes expected to the already inevitable adoption within the EU. However, this move by Norway could spark other non-EU countries in Europe to join the regulation. At the end of the day, it would be a big win for the industry if the EU would open its market to friendly, like-minded and experienced jurisdictions – such as the UK, Switzerland, and Norway – even if they don’t adopt MiCA one-to-one.