Europe Opens Formal Review of MiCA Crypto Rules, Eyes Stablecoin Overhaul

The European Union has launched a public consultation to revise its Markets in Crypto Assets (MiCA) regulation — enacted three years ago — in a process informally labeled 'MiCA 2.0,' with the review period closing around September 2026. The update is driven largely by the rapid expansion of stablecoins in institutional and wholesale finance, a use case MiCA's original framework was not designed to accommodate.

MiCA was conceived primarily around spot cryptocurrency markets. Since its enactment, stablecoins have surged in relevance as tools for international payments and institutional settlement, rendering the original categorization increasingly narrow. Regulators are now being forced to reckon with how the framework handles tokenization, reserve requirements, and multi-issuer token structures.

On stablecoins specifically, European policymakers have noticeably softened their previously hostile stance — a shift observers attribute in part to the passage of the GENIUS Act in the United States last year. That legislation established a legal definition for payment stablecoins and assigned oversight responsibilities to the Federal Reserve and the Office of the Comptroller of the Currency. Dollar-denominated stablecoins currently represent $310 billion of the $311 billion global stablecoin market, with non-dollar tokens accounting for less than 0.5%, according to DeFiLlama data.

John Orchard, chairman of the Digital Monetary Institute at OMFIF — an independent research group focused on central banking and economic policy — noted the European Central Bank's evolving position. 'If you listen to European Central Bank officials, you will notice their opinions change depending on the individual,' Orchard said. 'But they are now willing to tolerate stablecoins on bank balance sheets and perhaps as a remittance tool, but they do not want stablecoins for wholesale settlement, which the U.S. is prepared to experiment with.'

The ECB has repeatedly warned that the dominance of dollar-pegged stablecoins could undermine its control over monetary conditions across the 21-nation eurozone. Its preferred alternative remains a central bank digital currency (CBDC) rather than euro-denominated stablecoins — though some officials have moderated their outright opposition.

A structural difference between the two regulatory regimes remains significant: under MiCA, stablecoin reserves must be routed back into the banking system, whereas the GENIUS Act permits reserves to be held in U.S. government debt instruments. The European Commission is reported to be considering whether to allow a GENIUS-style model in which stablecoin operators could purchase money market instruments from European governments instead of depositing reserves in commercial banks. A key obstacle is the absence of a unified European treasury bond market comparable to U.S. Treasuries.

The banking sector on both sides of the Atlantic has lobbied against allowing stablecoins to pay yield to holders, citing the risk of deposit flight — the migration of funds from traditional bank accounts into blockchain wallets. Orchard noted the EU Commission intends to revisit this question, though he assessed a change as unlikely. A parallel provision within the U.S. Clarity Act, which has not yet been signed into law, reached only a contested compromise on the same issue.

One initiative receiving attention in the context of MiCA 2.0 is Qivalis, a consortium of banks and financial institutions developing a euro-denominated stablecoin. Because its members are banks, Qivalis can satisfy MiCA's reserve requirements internally and is positioned as a potential counterweight to U.S. dollar dominance — an objective aligned with the EU's broader strategic autonomy agenda.

Regulators are also examining how to handle multi-issuance stablecoins — tokens such as Circle Internet's USDC that can be minted by multiple distinct legal entities across different jurisdictions while appearing to users as a single, fungible asset. When MiCA was drafted, the European Commission intended to support multi-issuance models, but the regulatory mechanics of such structures remain an open question in the current review.

The European Securities and Markets Authority (ESMA) is expected to assume the role of centralized supervisory body for the crypto regulatory framework as part of the MiCA 2.0 reforms. The consultation process is set to conclude around September, after which lawmakers will assess the submissions before drafting proposed amendments.