MiCA Review: Keeping EU's Crypto Single Market Competitive
The European Commission's consultation on the MiCA review has closed, and the outcome will shape the compliance architecture for every crypto asset service provider (CASP) operating, or planning to operate, across the EU. The central tension is not between regulation and deregulation. It is between a rulebook that is proportionate to genuine risk and one that has accumulated cost faster than it has reduced harm. For accounting firms advising CASPs, CFOs managing digital asset balance sheets, and auditors signing off on stablecoin reserve disclosures, the review is not an abstract policy exercise. It has direct implications for authorization strategy, prudential capital planning, and the accounting treatment of e-money tokens and other crypto assets under both IFRS and US GAAP.
What MiCA Actually Achieved
Before MiCA came into force, a firm wanting to serve clients across Europe had to navigate a patchwork of national regimes, some with bespoke crypto licensing frameworks, others with no relevant framework at all. Authorization in one member state gave no right to operate in another. The compliance architecture had to be rebuilt, at least partially, for each jurisdiction.
MiCA changed that. A CASP authorized under MiCA in one EU or EEA member state can passport its services across the entire bloc. That single authorization covers a consumer base of roughly 450 million people, and it enables providers to invest in one compliance architecture rather than up to thirty separate ones.
The Passporting Dividend
Passporting is not just an administrative convenience. It restructures the economics of building a regulated crypto business in Europe. The fixed cost of authorization and ongoing compliance is amortized across a far larger addressable market, which shifts the risk-reward calculation for serious institutional entrants. For clients, the result is genuine competition among licensed, supervised providers competing on price, service quality, and security, all within a common regulatory floor.
That is a material achievement. The review should not disturb the passporting mechanism or the unified authorization standard that underpins it. The relevant question is whether the obligations attached to that authorization have remained proportionate to the scale of the market they unlock.
Where Proportionality Has Become a Real Concern
Regulatory frameworks tend to accumulate requirements over time, reporting obligations, documentation standards, and prudential buffers, often without a corresponding reduction in the specific risks each addition targets. MiCA is not immune to that dynamic. The review consultation has drawn attention to three structural areas where the cost-to-benefit ratio warrants genuine scrutiny.
Tiered Regulation by Size and Risk
Under the current framework, a CASP with a handful of clients faces materially the same authorization process and ongoing compliance burden as a large multinational managing billions in digital assets. The fixed cost of being authorized therefore falls most heavily on smaller and newer entrants, precisely the firms that generate competitive pressure on incumbents and drive product innovation.
A tiered approach, calibrated by asset volume under custody, client base size, or systemic relevance, would lower the barrier to entry for emerging players while preserving robust oversight for firms whose failure could create genuine market disruption. For accounting purposes, tiering would also clarify which prudential capital requirements and disclosure obligations apply at each threshold, reducing interpretive uncertainty in financial statement preparation.
Dual Licensing for E-Money Tokens
E-money tokens (EMTs) sit at an awkward intersection of MiCA and the Payment Services Directive (PSD2). Custody and transfer of EMTs can trigger PSD2 obligations on top of MiCA licensing, creating duplicative compliance costs and genuine legal uncertainty about which set of rules takes precedence in a given transaction. For stablecoin accounting purposes, this overlap also complicates the classification of EMT-related liabilities and the disclosure of regulatory capital held against them.
A clearer delineation between the two regimes, or a single-license pathway for firms whose EMT activity falls within a defined scope, would reduce compliance friction without weakening supervisory coverage. This is directly relevant to firms holding or issuing USDC or other euro-denominated stablecoins structured as EMTs, where the accounting treatment under IFRS 9 or IFRS 32 depends partly on the regulatory classification of the instrument.
Rigid Reserve Requirements for Stablecoin Issuers
MiCA requires stablecoin issuers to hold at least 30% of reserves as cash deposits at credit institutions. That rule was designed to ensure redemption capacity, and that objective is legitimate. The concern raised in the review consultation is about the form of compliance rather than the principle.
In a rising-rate environment, a mandatory minimum bank deposit allocation limits the yield available on reserve assets, affecting the issuer's economics and the long-run viability of competitively priced stablecoins. More significantly, concentrating reserves in bank deposits introduces counterparty risk at exactly the point where a banking stress event could coincide with elevated redemption demand. A more flexible allocation framework that permits other high-quality liquid assets, such as short-duration government securities, could strengthen resilience without compromising the redemption capacity the rule is meant to protect.
For auditors and CFOs, this matters directly. The classification and valuation of reserve assets on an issuer's balance sheet, whether as cash equivalents, financial assets at amortized cost, or fair value through profit or loss under IFRS 9, depends on the composition of the reserve portfolio. A rule change that permits a broader range of assets would require issuers and their auditors to revisit existing accounting policy elections and disclosure frameworks. Teams monitoring stablecoin accounting and audit committee priorities should flag this as a live policy variable, not a settled matter.
The Cumulative Cost Risk
No single MiCA requirement has, by itself, driven firms out of the EU market. The concern is cumulative. Each additional reporting obligation, documentation requirement, and prudential buffer adds a marginal cost that is manageable in isolation. Across the full stack of MiCA compliance, however, the total overhead can become material enough to change investment decisions, particularly for firms weighing whether to build their primary operations inside or outside the EU.
Mobility and Market Shrinkage
Digital asset businesses are more geographically mobile than most financial services firms. Technology infrastructure can be redomiciled, and customer relationships in a cross-border market do not automatically follow regulatory perimeters. If the review adds materially to the compliance burden without a clear risk-based justification, the likely result is not a safer market but a smaller one: fewer firms authorized in the EU, less competition among providers, and less choice for European consumers and institutional clients.
That outcome would be bad for the market and bad for supervisors, who would oversee a diminishing share of global crypto activity that continues regardless of where it is booked. The argument for proportionality is not that firms should bear no cost. It is that cost should track risk, and where it does not, the review should correct the misalignment.
Accounting and Reporting Implications for Firms
Whatever the final shape of the MiCA review, firms need to be preparing their accounting and compliance infrastructure now. Several issues are already live.
IFRS Crypto Asset Classification Under Review
IFRS does not yet have a dedicated standard for crypto assets. IAS 38 (intangible assets), IAS 2 (inventories), and IFRS 9 (financial instruments) each apply to different asset types depending on how the asset is held and for what purpose. The MiCA review could change the regulatory classification of certain tokens, particularly EMTs, in ways that affect their IFRS accounting treatment. Firms should be mapping their token portfolios against existing IFRS policy elections and identifying where a reclassification under MiCA could trigger a change in accounting treatment.
For firms also managing US GAAP reporting, the position has shifted since FASB issued ASC 350-60, which requires fair value measurement for in-scope crypto assets. A review of MiCA's asset classification could affect which assets fall within ASC 350-60's scope for dual-reporter entities, and the interaction between regulatory classification and accounting standard application deserves explicit attention in any policy gap analysis.
Prudential Capital and Disclosure Obligations
MiCA sets minimum capital requirements for CASPs, calibrated by service type. Any tiering reform in the review could change the applicable thresholds for a given firm, affecting the amount of regulatory capital that must be held and disclosed. Finance teams should be stress-testing their capital positions against both the current rules and plausible reform scenarios, and ensuring that disclosures in financial statements accurately reflect the regulatory capital regime the entity is subject to.
ESMA's evolving supervisory priorities add another layer. Firms should be reading the latest ESMA guidance carefully. Our earlier coverage of ESMA's 2027 MiCA supervision priorities for CASPs sets out the specific areas where supervisory attention is intensifying, and those priorities have not softened while the review consultation was open.
Reserve Asset Accounting for Stablecoin Issuers
If the review produces a more flexible reserve allocation framework, stablecoin issuers will need to update their accounting policies to reflect the new asset mix. Key questions include: Are government securities held as reserves measured at amortized cost or fair value? If fair value is used, do gains and losses flow through profit or loss or other comprehensive income? What disclosures about credit risk, liquidity risk, and concentration risk are required under IFRS 7? These are not hypothetical questions. They are live issues for any issuer that would take advantage of a revised reserve framework, and the accounting policy decisions need to be made before the first financial statements under the new rules are prepared, not after.
What Firms Should Do Before the Review Concludes
The MiCA review will produce legislative proposals, and those proposals will take time to move through the EU legislative process. That creates a window to prepare rather than react.
Practical Steps for Accounting Firms and CFOs
First, map your current MiCA authorization category and the specific obligations attached to it. Identify which obligations are driven by the current rules and which might change under plausible reform scenarios, particularly tiering, EMT licensing, and reserve composition rules.
Second, review the accounting policy elections you have made for crypto assets and stablecoin reserves. Identify where a regulatory reclassification would require a change in accounting treatment, and flag those areas for your auditors now rather than at the year-end review.
Third, assess your capital position under both current and potential reformed thresholds. If tiering is introduced, your firm's classification could change, and with it, the applicable prudential capital floor.
Fourth, review your reserve asset composition if you are a stablecoin issuer. Model the accounting and liquidity risk implications of a shift from bank deposits toward government securities or other high-quality liquid assets, so you are ready to act if the 30% deposit floor is amended.
Finally, watch the legislative timeline. The Commission's proposals following the consultation will set the pace, and early engagement with the draft text, through industry bodies or direct response, is the most effective way to shape the final outcome.
Europe has built something that most other jurisdictions have not managed: a large, unified, credibly regulated market for crypto assets. The MiCA review is the opportunity to ensure that market stays attractive to the firms that make it function. Getting the calibration right serves regulators and industry alike, and the firms that are best prepared will have the clearest advantage when the new rules land.
Source: Cointelegraph Regulation
Frequently Asked Questions
What is the MiCA review and why does it matter for accounting firms?
The MiCA review is a formal consultation process by the European Commission to assess whether the Markets in Crypto Assets Regulation is working as intended and where it needs to be recalibrated. For accounting firms, it matters because any changes to authorization categories, reserve requirements, or capital thresholds will directly affect the accounting treatment of crypto assets and stablecoin reserves on client balance sheets.
How could a MiCA tiering reform affect CASP compliance costs?
If the review introduces tiered obligations based on asset volume or systemic relevance, smaller CASPs could face a lower compliance overhead, while larger firms would remain subject to the full framework. For accounting purposes, tiering would also clarify which prudential capital disclosure requirements apply, reducing ambiguity in financial statement preparation for firms at or near threshold boundaries.
What does the 30% bank deposit reserve rule mean for stablecoin accounting under IFRS?
The current rule requires stablecoin issuers to hold at least 30% of reserves as deposits at credit institutions. Under IFRS 9, those deposits are typically measured at amortized cost. If the review permits substitution with government securities or other high-quality liquid assets, issuers would need to reassess their accounting policy elections, as the measurement basis, fair value versus amortized cost, and the related disclosure requirements under IFRS 7 could differ from the current treatment.
How does the EMT dual licensing issue affect firms holding USDC or euro stablecoins?
E-money tokens structured under MiCA can simultaneously trigger PSD2 obligations when transferred or held in custody. This creates regulatory and legal uncertainty that flows into accounting: the classification of EMT-related liabilities, the regulatory capital to be held against them, and the disclosure of contingent obligations depend partly on which regulatory regime is treated as primary. A single-license pathway, if adopted in the review, would simplify both the compliance and the accounting treatment.
When will the MiCA review produce binding changes?
The consultation has closed, but EU legislative processes typically take considerable time from consultation to final rule. Commission proposals will need to pass through the European Parliament and Council before becoming binding. Firms should monitor the legislative timeline and engage early with draft proposals, as the window between publication and transposition is the most effective point for shaping final outcomes and updating internal accounting policies.