Regulators from France, Italy, and Austria are sounding the alarm: MiCAR, the EU’s landmark crypto regulation, may not be delivering the level playing field it promised.
When the European Union introduced the Markets in Crypto-Assets Regulation (MiCAR), it was hailed as a milestone in global crypto regulation. For the first time, crypto service providers would be able to operate across all EU member states with just a single license. The system was designed to end the fragmented patchwork of national rules and make Europe one of the most attractive jurisdictions for blockchain innovation.
But less than a year after its rollout, significant cracks are already beginning to show. Concerns are growing that some national regulators may be issuing licenses far too easily, allowing companies to “shop around” for the least demanding jurisdictions.
MiCAR: Europe’s Bold Step Toward Regulatory Clarity
Before MiCAR, crypto businesses in Europe faced an uphill battle. To serve customers across the EU, exchanges, wallet providers, and other platforms needed to register separately in each member state. This meant higher costs, slower expansion, and inconsistent consumer protections.
MiCAR was meant to change all that. The regulation created a passporting system: once a crypto company obtained authorization in one EU country, it could use that license to operate across the entire union. In theory, this would:
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Foster innovation by reducing regulatory fragmentation.
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Increase consumer trust by setting minimum EU-wide standards.
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Strengthen oversight by giving regulators new tools to monitor the sector.
However, MiCAR left one crucial detail in the hands of member states: the actual issuance of licenses. Local financial regulators are still responsible for reviewing applications, checking compliance and ultimately granting authorization. And that’s where the system is now showing weaknesses.
Diverging Standards Across Member States
Not all regulators interpret their role with the same rigor.
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In countries like France and the Netherlands, the licensing process is strict and lengthy. Authorities require extensive documentation, robust compliance programs, and clear proof that firms can protect investors.
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In other countries, however, regulators appear far more permissive. Malta, in particular, has been singled out for issuing licenses with far less scrutiny. Major players such as OKX have already secured authorization there, raising eyebrows elsewhere in Europe.
This divergence undermines the very purpose of MiCAR: a uniform regulatory framework. Instead, critics warn, Europe may be drifting toward a two-tier system, one where firms can pick the easiest regulator while still gaining full access to the EU market.
France, Italy and Austria Push Back
France’s financial regulator, the Autorité des Marchés Financiers (AMF), has been among the most vocal critics. The AMF has even threatened to restrict market access for crypto firms licensed in other member states if it believes their oversight has been too lax.
While the AMF has not named specific companies or countries, its message is clear: France will not stand by if “regulatory arbitrage” becomes the norm. The regulator is urging that oversight be centralized under the European Securities and Markets Authority (ESMA), based in Paris.
Italy and Austria have joined France in this call. Both countries argue that only a centralized authority can guarantee consistent standards across all member states.
Malta Under Scrutiny
Malta has been at the center of these concerns. Earlier this year, ESMA formally questioned the island nation’s regulatory approach, suggesting that at least one license may have been granted without sufficient risk assessment. While ESMA did not disclose details, the incident reinforced perceptions that Malta could become a “backdoor” into the EU crypto market.
Malta, for its part, has defended its framework, noting that it was one of the first EU countries to create a comprehensive crypto regime. But critics argue that speed and friendliness toward the industry should not come at the expense of investor protection.
Can France Legally Block Other Licenses?
Here lies a thorny question: under EU law, can a member state block market access to a firm licensed elsewhere in the union?
Some legal experts argue that such a move would violate the principles of the single market. If MiCAR licenses are valid EU-wide, national regulators cannot simply refuse them. Others believe there may be room for interpretation, especially if regulators can demonstrate that consumer protection is at risk.
For now, France appears to be issuing a warning rather than a legal threat. By raising concerns publicly, the AMF is signaling that it will closely monitor foreign-licensed firms operating in its jurisdiction and escalate issues to ESMA if needed.
The Bigger Picture: Europe’s Global Crypto Ambition
The stakes are high. MiCAR is not just about Europe, it is seen as a model for crypto regulation worldwide. Policymakers in the U.S., Asia, and beyond are watching closely to see if the EU can balance innovation, competition, and investor safety.
If the framework is perceived as inconsistent or vulnerable to regulatory shopping, it could damage the EU’s credibility as a regulatory leader. Worse, it could undermine investor trust at a time when crypto markets are already battling reputational challenges after scandals like FTX.
Outlook: Toward Centralized Oversight?
Calls for stronger centralization are likely to grow louder. A shift toward ESMA oversight would reduce differences between member states and limit the risk of regulatory arbitrage. But it would also mean reducing national regulators’ autonomy, something that could face political resistance.
For now, the success of MiCAR depends on the discipline of national regulators. If countries enforce the rules with equal rigor, Europe could become the most attractive and trustworthy crypto market in the world. If not, MiCAR may end up exposing the very weaknesses it was designed to solve.
Key Takeaway
Europe’s MiCAR regulation was designed to simplify and unify crypto licensing. But divergent approaches among member states are creating tension. With France, Italy and Austria calling for centralized oversight, the EU faces a choice: tighten control to preserve trust in MiCAR or risk seeing its flagship crypto law weakened by uneven enforcement.
