As Europe’s crypto regulatory framework comes into full effect, industry voices broadly agree that regulation is now a permanent fixture, but remain divided over whether it primarily protects consumers or strengthens the position of larger firms.

The European Union’s cryptocurrency sector entered a new phase on Wednesday as the Markets in Crypto-Assets (MiCA) regime became fully operational. Under the rules, any crypto business operating across the 27-member bloc must secure authorization or stop serving EU customers.

Thousands of crypto service providers were forced to suspend operations after the June 30 deadline, when they were required to cease EU activity, leaving many users searching for MiCA-compliant platforms.

While the introduction of a single EU-wide regulatory system has been welcomed by many executives and legal experts, debate continues over its impact on competition. Some argue that the cost and complexity of compliance is squeezing out smaller firms and pushing them toward offshore hubs such as Dubai. Others say the framework appropriately rewards companies that have invested in transparency and governance. A lingering concern is whether regulators can effectively block unlicensed offshore platforms from continuing to reach EU customers.

Joseph Borg, a Maltese lawyer and partner at WH Partners, described regulation at the European level as a positive step, stating, “Regulation is necessary.”

Still, he argued that enforcement has become the bigger challenge, not the legal framework itself, and suggested regulators may struggle to supervise the market at scale. He estimated that MiCA could shrink Europe’s crypto service provider base from around 3,000 firms to roughly 300–400 licensed operators.

Borg also noted that regulators appear more comfortable overseeing a smaller number of firms rather than expanding the infrastructure needed to monitor a larger ecosystem.

On market fairness, he said rising compliance obligations tend to advantage companies with greater legal and operational resources. While MiCA is not intentionally designed to favor large firms, he argued that its technical and supervisory requirements make it harder for startups to compete.

Others reject that interpretation. Alex Fazel, chief partnership officer at SwissBorg, said MiCA licensing is less about size and more about proving operational transparency.

“Transparency is key,” Fazel said. “You cannot build trust without transparency.”

SwissBorg obtained its MiCA authorization through France’s financial regulator this year, a process Fazel said required extensive disclosure of governance and compliance frameworks.

He emphasized that licensing cannot simply be purchased with financial strength. “A MiCA license is not something you can buy because you have money and power,” he said.

Even so, Fazel acknowledged that startups are likely to face the greatest strain, as the cost of compliance and licensing may limit innovation among smaller players.

Meanwhile, for regulated exchanges, enforcement against offshore platforms remains a key concern. Lin Han, CEO and founder of Gate Group, said compliant firms have long prepared for MiCA, but the system only works if all participants abide by the same rules.

“Everybody needs to follow the rule,” Han said. “Then we can compete on better service for users.”

The European Securities and Markets Authority (ESMA) has warned that unlicensed firms serving EU customers are in breach of EU law and must cease operations. It has also cautioned against “reverse solicitation” strategies and encouraged tools such as geo-blocking to restrict access.

However, Han questioned whether regulators have the resources to prevent offshore platforms from continuing to operate in the EU market.

“If unregulated or unregistered platforms can still provide services, then it’s not a level playing field,” he said.

Despite differing perspectives, all three agreed that crypto regulation in Europe is now firmly established. Borg said MiCA has helped strengthen ties between banks and crypto firms, while Han noted that Europe remains too important a market for global exchanges to ignore despite higher compliance costs. Fazel added that stronger oversight improves consumer protection by increasing accountability and providing clearer legal recourse.

“I really see regulators as a net positive for the industry,” Fazel said. “They’re here to verify.” Borg concluded that MiCA’s rollout reflects the maturation of crypto, arguing the sector has become too large to realistically suppress or ban.