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MiCA compliance costs could squeeze early-stage crypto in Europe
A legal push for investor protection and legal certainty may raise the bar for smaller projects that cannot afford MiCA requirements, while aiming to improve trust after past hacks and control failures.
A guest post by Yuliya Barabash, founder and managing partner at SBSB Fintech Lawyers, argues that the EU’s Markets in Crypto Assets framework, or MiCA, is designed to make European crypto “safer,” but it also risks shrinking the pool of startups that can survive under the rules.
Barabash says MiCA’s obligations, including capital, paperwork, governance, safeguarding, ICT, outsourcing, and local presence requirements, can be too costly for early-stage firms. The post frames the criticism as valid, while emphasizing that once a company handles customer assets, payment flows, or exchange activity, promises of innovation are no longer enough without operational controls and maturity.
The post adds that Europe’s approach is not intended to maximize the number of crypto startups, but to establish conditions where existing firms can be trusted by users, banks, partners, and regulators. It also argues the sector’s reputation damage has more often come from failures such as hacks, poor controls, misleading promises, and rapid growth without operational readiness.
Barabash concludes that the EU is working toward “credible” enforcement with predictable rules, which may encourage industry participation over time. At the same time, the author notes a central flaw in how the framework treats crypto as though the sector were already mature, according to the text provided.