The EU’s Markets in Crypto-Assets Regulation (MiCA) is reshaping the competitive landscape for Europe’s Web3 industry. According to Charles Guillemet, Chief Technology Officer at hardware wallet provider Ledger, while the rules were intended to unify the market and enhance security, their practical implementation is barring many early-stage startups due to high capital and compliance costs.
MiCA compliance costs are increasing
Under MiCA’s tiered requirements, crypto companies entering different business areas must meet varying minimum capital thresholds. The report notes that firms providing advisory services need a minimum capital of approximately €50,000, while those operating trading platforms require around €150,000. In addition, companies must also incur expenses for legal counsel, auditing, insurance, and the establishment of ongoing compliance systems.
Prior to MiCA, the European Commission's impact assessment indicated that the cost for project teams to prepare a white paper could range from $4,500 to $87,000, depending on business complexity and legal service requirements.
Banks are accelerating their deployment of blockchain technology.
European regulators believe that stricter requirements help protect consumers and build a foundation of trust for institutional capital entering the market. The report notes that this change is occurring as traditional financial institutions move from experimenting with blockchain to larger-scale deployments.
Guillemet noted that after the launch of spot crypto ETFs in early 2024, demand from traditional banks for institutional-grade custody and asset tokenization rose significantly. Unlike before, when banks only engaged in small-scale innovation projects, some core business divisions have begun actively expanding into crypto and blockchain services.
Native crypto companies provide foundational capabilities.
To attract this segment of institutional clients, Ledger is also expanding from retail hardware wallet services to enterprise-grade infrastructure solutions. The company states that it has invested hundreds of millions of dollars over the long term in security research and development and maintains an engineering team of approximately 200 to 250 people.
However, the report also notes that even with substantial investment, Web3 infrastructure struggles to fully eliminate operational risks. Ledger has previously disclosed a cloud service breach related to a third-party processor. The company had also experienced a data breach in 2020 affecting approximately 270,000 customers, as well as a vulnerability in 2023 that resulted in approximately $500,000 in losses for decentralized applications.
The results show a new divergence in the European market: on one side, small crypto startups are under pressure due to rising compliance costs, while on the other, traditional financial institutions are leveraging the technology and infrastructure of native crypto firms to enter blockchain and tokenization services more quickly.