Building a Competitive European Crypto Market Through Proportionate MiCA Rules
WH Partners has submitted its response to the European Commission’s targeted consultation on the review of the Markets in Crypto-Assets Regulation (MiCA).
Our position is clear. Europe needs rules that protect customers, support competition and give businesses certainty. The review should reduce unnecessary costs, preserve national supervision and keep European markets open to innovation and global participation.
As advisers to businesses ranging from new entrants to established international operators, we see how regulatory choices affect who can enter a market, what services they can offer and whether they can compete. Those practical effects should be central to the review.
Proportionality and fair access for smaller firms
Small businesses must have a fair chance to compete. A requirement that a large financial group can absorb may be a serious barrier for a smaller provider. The combined cost of licensing, capital, reporting, governance and external advisers can determine whether a business gets off the ground.
Proportionality must therefore mean something in practice. Application requirements should reflect the services a firm provides, its complexity and the client assets it handles. Authorities should reuse information already supplied, explain requests for further documents and set clear milestones for processing applications. Supervisory fees should also be proportionate.
We support allowing outsourcing and shared compliance resources where responsibility remains clear. We oppose higher capital requirements or additional reporting without evidence that they are needed. A level playing field requires rules that smaller firms can realistically meet while upholding appropriate customer-protection standards.
National supervision and European cooperation
We oppose transferring the authorisation and direct supervision of crypto-asset service providers to ESMA. National authorities should retain that responsibility.
European cooperation has an important role. Authorities should exchange information, share expertise and work towards consistent interpretations of common rules. However, authorities should examine and address differences in national practice on their merits. They should not automatically become an argument for moving supervision to the European level.
National expertise matters, including in smaller Member States such as Malta, which has developed experience in digital assets. Better coordination should make supervision more effective without creating another approval stage for businesses.
That position also comes with a clear expectation of national authorities: they should refrain from adding requirements beyond the common framework without adequate justification.
Regulatory independence and safeguards against arbitrary interference
Regulated businesses should be protected from arbitrary and political interference. This principle applies equally to national regulators, European supervisory bodies and central banks.
Decisions to restrict a product, suspend an activity or intervene in a business must follow clear regulatory criteria. Authorities should explain their decisions, consider less restrictive alternatives and provide effective routes for review and appeal. Emergency restrictions should be time-limited and regularly reassessed.
Rules intended to protect customers or financial stability should not be used to favour a particular currency, nationality or business model. Businesses need to know that their treatment will depend on the law and the risks they create.
Stablecoins, international access and reserve-sharing
This is particularly important for stablecoins. We support European access to global stablecoins and international trading markets through authorised providers, with appropriate safeguards. Restricting that access risks reducing choice, weakening competition and encouraging users to turn to providers outside the EU framework.
We favour recognising overseas regimes where they deliver comparable protections for reserves, redemption and supervision. Recognition should follow objective, published criteria. It should not depend on another country copying every European rule or become a bargaining tool for unrelated policy goals.
The same approach should guide euro-denominated stablecoins. We believe the euro’s international use is best supported by products that people find useful and trustworthy. Regulation should allow those products to compete on their merits.
Our response also supports allowing stablecoin issuers to share returns from compliant reserves with holders under clear conditions. Any such change must preserve redemption rights, explain the risks and respect the legal boundary with deposit-taking.
The scope and boundaries of MiCA
MiCA should have clear limits. Using blockchain does not, by itself, justify a new regulatory regime.
Where a product satisfies the legal definition of a financial instrument, the relevant financial-services rules should apply. Where an activity meets the tests for banking, payments or investment-fund regulation, those frameworks should govern it. The review should clarify uncertain boundaries and remove duplication.
This also requires a sharper distinction between providing technology and providing a regulated service. Our submission highlights uncertainty around crypto-asset transfers: technical message-routing should not be confused with directing or controlling a movement of client assets.
For decentralised finance, our position is that identifying the software developer should not, by itself, make that developer a regulated financial intermediary. The important questions concern what the person actually does, whether they actively control the running service and whether the service and assets fall within the law’s scope.
Decentralised finance, prediction markets and binary options
We oppose mandatory certification that would effectively require permission to develop or access software. Voluntary audits can help users assess risks, but they should not become an indirect licensing requirement. Service providers should remain accountable for their own misconduct, misleading statements and custody failures.
Prediction markets need similarly careful treatment. Assess individual contracts against existing legal definitions. Where a contract is a financial instrument, financial-services rules should apply. Where it falls outside that framework and constitutes gambling under national law, national gambling regulation should govern it.
We also strongly support reconsidering blanket restrictions on retail binary options in favour of tightly controlled, regulated access. Our concern is that prohibition can push demand towards offshore services where customers have fewer protections.
Ownership rights and legal certainty
Clear ownership rights would make a practical difference to both businesses and customers. People should understand what they own when they hold a token, how those rights transfer, and what happens if a custodian becomes insolvent.
Our response supports an optional European framework addressing these questions, together with clear rules on which country’s law applies. Businesses should be able to use that framework without requiring every Member State to replace its property law.
The MiCA review is an opportunity to address these practical problems. We urge the Commission to judge proposed changes by the protection they deliver, the costs they impose and their effect on competition. Europe should offer a market where customers have enforceable rights, businesses can plan with certainty and smaller operators have a reasonable opportunity to succeed.
