MiCA is finally here. It’s been a long time coming, and the regulators set out their stool many months ago in terms of what they expected, but I feel like we’re now seeing a shift that could fundamentally reshape our ecosystem. And while I’m passionate about regulation done right (trust me, I live and breathe this stuff), I can’t help but worry about the smaller players. Are we creating an industry where only those with the deepest of pockets can afford to play?
Reality hits hard. Compliance costs are crushing smaller companies disproportionately. Think about the basics – sophisticated AML systems, regular audits, cybersecurity infrastructure, and those hefty capital requirements. While larger firms can absorb these as just another budget line, for startups, every additional requirement could mean the difference between survival and shutdown. Add in the external consultants (because who can afford a full compliance team from day one?) and cloud services, and you’re looking at a massive challenge before you’ve even started. Then there’s the HR headache of finding and retaining qualified compliance staff. Here’s how I would approach things if you are going to afford a place at the table.
Stay onside with the regulators
One of the most universally celebrated achievements of MiCA might also be its Achilles Heel. You see, standardising practices across so many EU jurisdictions – while absolutely necessary – creates its own unprecedented challenges for those on the other side. Each jurisdiction still maintains its own licensing process, its own regulatory style, its own specific requirements. It is complex. This can be particularly overwhelming for smaller teams to navigate.
But here’s what I’ve learned in the trenches; the key is engaging with regulators early and truly understanding their style. Yes, the landscape is becoming less favourable for smaller companies, particularly with increasing focus on consumer protection. But there’s a way through this – it starts with embedding compliance into your platform from day one and really understanding your users and the risks they bring. I’ve seen this work, time and time again.
The path starts with an MVP
The solution? I’m a firm believer in a phased approach to compliance. At Fiat Republic, we’ve seen incredible success with a model that lets companies meet minimum standards first, then build from there. Give them a year to mature their compliance while maintaining operations. It’s not just theory – we’re seeing it work in practice, creating realistic pathways that don’t stifle innovation or growth.
Technology is our greatest ally in this fight. We’re witnessing incredible advances in AI-driven compliance solutions that can level the playing field. These tools make sophisticated compliance accessible to smaller players – it’s about working smarter, not harder. Combined with a risk-based approach that scales requirements based on a company’s size and market impact (just look at Switzerland’s Fintech License model), we can maintain high standards while acknowledging that one size doesn’t fit all.
My takeaway is this. MiCA is the Christmas gift the crypto industry so desperately needed. It’s a good thing, and don’t let this increased scrutiny scare you off. Yes, the regulatory landscape is challenging – I see it every day – but it’s not insurmountable. Start by understanding the regulatory landscape before you even go live. Make compliance part of your DNA from day one. Build your comprehensive compliance roadmap early, and be prepared to adapt as requirements evolve.
The future of crypto shouldn’t be determined by who has the deepest pockets. While standardisation across EU jurisdictions and increased consumer protection are making the landscape more challenging for smaller players, resilience and smart preparation – e.g. the use of affordable technology – can make the difference. We need innovation and new ideas more than ever – and that often comes from the smaller players who see things differently.
We can maintain the spirit of crypto while embracing regulation. It just takes the right approach, the right tools, and the determination to make it work. I’ve seen companies do it. I’ve helped companies do it. And I know you can too.
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