The EU's MiCA (Mini-Asset Regulatory Framework) is reshaping the competitive landscape of Europe's Web3 industry. Charles Guillemet, CTO of hardware wallet manufacturer Ledger, stated that while the rules were originally intended to unify the market and improve security, in practice, the high capital and compliance costs are excluding many early-stage startups.
MiCA compliance costs are rising.
According to MiCA's tiered requirements, crypto companies need to meet different minimum capital thresholds to enter different business areas. The report mentions that companies providing consulting services require a minimum capital of approximately €50,000, while operating a trading platform requires approximately €150,000. In addition, companies must also bear expenses for legal counsel, auditing, insurance, and the establishment of ongoing compliance systems.
The European Commission's previous impact assessment of MiCA indicated that the cost for the project team to prepare a white paper could be between $4,500 and $87,000, depending on the complexity of the business and the legal services required.
Banks are accelerating their deployment of blockchain technology.
European regulators believe that stricter requirements will help protect consumers and build a foundation of trust for institutional funds entering the market. The report points out 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, traditional banks saw a significant increase in demand for institutional-grade custody and asset tokenization. Unlike before, when they only pursued small-scale innovative projects, some core business units of banks have begun to more actively develop crypto and blockchain services.
Native encryption companies provide underlying capabilities
To attract these institutional clients, Ledger is also expanding from its retail hardware wallet business to enterprise-oriented infrastructure services. The company says it has invested hundreds of millions of dollars in security research and development and maintains an engineering team of about 200 to 250 people.
However, the report also noted that even with significant investment, Web3 infrastructure still faces considerable operational risks. Ledger has previously disclosed cloud service breaches related to third-party processors. Prior to this, the company also experienced a data breach in 2020 affecting approximately 270,000 customers, and a vulnerability in 2023 that resulted in approximately $500,000 in losses for decentralized applications.
The results show a new divergence emerging in the European market: on one hand, small crypto startups are under pressure due to rising compliance costs, while on the other hand, traditional financial institutions are leveraging the technology and infrastructure of native crypto companies to enter the blockchain and tokenization business more quickly.
