Europe’s Markets in Crypto-Assets (MiCA) framework is entering a fresh review phase—commonly dubbed “MiCA 2.0”—with consultations expected to run through September.

It has been six years since MiCA was first proposed and three years since it came into force. In that time, the digital asset landscape has evolved significantly, particularly with the growing use of stablecoins for cross-border payments by both businesses and individuals.

This shift has pushed fiat-backed tokens to the center of the discussion as regulators reassess a framework that was initially designed with spot crypto markets in mind.

The European Central Bank has repeatedly warned that the increasing dominance of dollar-pegged stablecoins could undermine its control over monetary policy in the eurozone. While it continues to favor a central bank digital currency over privately issued euro stablecoins, some policymakers are beginning to show greater flexibility, according to OMFIF’s John Orchard.

Orchard noted that ECB views are not uniform, but there is rising acceptance of stablecoins for limited uses, such as on bank balance sheets or in remittances. However, officials remain wary of their role in wholesale settlement, an area where U.S. regulators have been more open to experimentation.

Meanwhile, the U.S. has taken steps to formalize stablecoin oversight through measures like the GENIUS Act, which defines their role in payments and assigns regulatory responsibilities. Dollar-backed stablecoins continue to dominate the market, while non-dollar alternatives account for only a small share.

Regulators are also weighing risks such as deposit flight—the migration of funds from traditional bank accounts to crypto wallets—as well as ongoing debates around whether stablecoins should generate yield. Banking groups in both the U.S. and Europe have pushed back against yield-bearing models, and although the European Commission is revisiting the topic, meaningful changes appear unlikely.

A key difference between the EU and U.S. approaches lies in reserve requirements. MiCA requires reserves to be held largely within the banking system, while U.S. frameworks allow backing with government securities. This divergence has spurred initiatives like Qivalis, a consortium seeking to develop a euro-denominated stablecoin that meets EU rules while supporting financial stability and reducing reliance on the dollar.

Europe also faces structural challenges, including the lack of a unified sovereign bond market similar to U.S. Treasuries. One idea under consideration is a synthetic “safe asset” model, where stablecoin reserves are invested in European money market instruments.

Another complex issue is how to regulate multi-issuer stablecoins like USDC, which can be issued across different jurisdictions but function as a single, interchangeable token. While MiCA originally aimed to accommodate such models, concerns raised during implementation—particularly by the ECB—have made this more complicated.

Industry participants argue that stablecoins derive their core value from global interoperability, warning that geographic restrictions could fragment their utility.

Beyond stablecoins, the MiCA review is also examining whether to centralize oversight under the European Securities and Markets Authority (ESMA). While this could reduce inconsistencies across member states, it also raises concerns about increased bureaucracy that could slow innovation.

Currently, supervision remains with national regulators, and any shift toward centralization would require legislative changes. Authorities are also reviewing how MiCA aligns with other frameworks such as MiFID.

From a business standpoint, firms stress the importance of maintaining a regulatory environment that supports expansion and cross-border activity. Financial hubs like Luxembourg continue to play a key role, and companies hope these advantages will endure as the framework evolves.

Ultimately, the success of MiCA 2.0 will hinge not only on regulatory refinement but on its ability to foster innovation and enable companies to scale across Europe’s digital asset market.