The European cryptocurrency industry is starting to feel the impact of rules that, until recently, were mostly written on paper. The European Union’s Markets in Crypto Assets (MiCA) framework, the first of its kind, is currently being rolled out across all member states.
It comes after years of rapid growth and a handful of failures that showed the need for clearer rules and stronger protections. With MiCA coming into force, crypto assets no longer operate in a legal gray area across much of Europe, but within a more established and predictable set of rules.
For investors, MiCA is supposed to offer greater protection and transparency. For crypto projects, exchanges and startups, this creates new expectations for how digital assets are issued, managed and brought to market.
The scope of MiCA is intentionally broad. It applies to most cryptoassets that are not already regulated as traditional financial instruments under laws such as the EU Markets in Financial Instruments Directive (MiFID II). Simply put, tokens that do not look or behave like securities generally fall under MiCA.
Stablecoins receive special attention under MiCA. Issuers are expected to actually hold the assets they claim to hold, allow users to easily trade tokens, and follow stricter financial rules intended to reduce the risk of sudden outages.
Why compliance is starting to matter more
Where MiCA stops, MiFID II can apply. Simply put, if an activity involves anything resembling a traditional financial instrument, firms may need MiFID II authorization and must follow the same types of conduct and market rules used in traditional finance.
As these rules come into effect, compliance with them becomes a practical way to determine which platforms can be trusted. In this context, centralized exchanges such as Kraken (regulated by MiCA and MiFID II where applicable) are increasingly seen as part of Europe’s regulated financial infrastructure rather than outliers operating on its periphery.
At a broader level, the new EU rules are designed to reduce the risks of failures that have proven costly for users in the past. They also raise expectations for what “serious” crypto infrastructure looks like, from how customer assets are held to how platforms report, govern themselves, and manage risk. This clarity makes it easier for banks, asset managers and other institutions (many of which require defined compliance frameworks) to participate in the market with confidence.
What these guarantees really change
MiCA sets some ground rules for how crypto platforms should operate on a daily basis. This includes being upfront about how they are managed, keeping customer funds separate from company funds, and ensuring there is enough support in place to help users if problems arise.
Under MiCA, user coins are not mixed with an exchange’s own currency, and independent controls are used to ensure that customer holdings are fully accounted for. The idea is simple: if a platform encounters difficulties, users should not wonder where their assets have gone.
Kraken’s MiCA-regulated custody entity in Europe provides a clear example of how this plays out. Following these rules, the familiar safeguards of traditional finance are also starting to appear in crypto, particularly in how assets are stored and monitored, helping things hold up even when markets are tough.
Track the flow of funds
The EU is also strengthening rules on how crypto transactions are tracked, particularly when it comes to anti-money laundering (AML) and counter-terrorist financing (CTF). Authorities have extended the so-called travel rule to cryptocurrencies, meaning that basic information about who sends and receives funds must be shared before a transfer is made, similar to how bank transfers already work.
At the same time, the EU is establishing a new Anti-Money Laundering Authority (AMLA) to oversee law enforcement in member states and maintain consistency of standards.
On a daily basis, this might mean a few extra prompts for users. On platforms like Kraken, EU and UK-based customers may be asked to confirm whether a transfer is going to another exchange or to a self-hosted wallet, and to provide basic sender or recipient information for certain transactions. Although this adds a step, it reflects how the regulation appears in the actual user experience.
From fragmentation to the single market
MiCA also introduces a shared licensing model across Europe. Crypto exchanges must still be licensed by a national regulator, but once approved, this license can be used across all EU and EEA countries, rather than being limited to a single market.
In practice, this is starting to bring together Europe’s fragmented crypto market. There are higher barriers to entry, and not every exchange will be able to overcome them. But for the platforms that do, the reward is greater trust and the ability to operate at scale across the region.
For everyday European crypto users, this change may translate into greater confidence when choosing where to trade. With MiCA’s consumer protection and monitoring, users know that a European-licensed exchange should follow the same basic rules across borders. This shared standard makes it easier to ensure that a platform follows the same rules wherever it operates.
Kraken was one of the first major exchanges to obtain a MiCA license through the Central Bank of Ireland in mid-2025. Obtaining approval quickly allowed Kraken to begin expanding its services across Europe under a single regulatory framework, giving its European users a clearer idea of the standards under which the platform operates.
European or American regulations
The European Union and the United States have taken different paths when it comes to regulating cryptocurrencies. Europe has focused on establishing clear rules from the start, while the United States has relied heavily on enforcement and litigation to define what is and isn’t allowed.
In practice, this means that European companies have clearer guidelines on how to operate, while many American companies have had to interpret the rules after the fact.
The United States is starting to move toward a more structured approach, particularly around stablecoins, but its framework is still taking shape. For now, the rules-based European model offers more clarity and consistency.
For investors and market participants, regulation is no longer a matter of substance. It actively determines where crypto can grow, which platforms can operate at scale, and what trust will look like in the future. As European rules move from paper to practice, the market is entering a phase where clarity, consistency and accountability matter just as much as innovation.
