Cryptocurrency regulation in the EU in 2024-2025

Introduction

The European Commission is actively working on revising cryptocurrency regulations. As part of the MiCA (Markets in Crypto-Assets Regulation) initiative, measures are being discussed to strengthen supervisory coordination and potentially expand the role of ESMA (European Securities and Markets Authority) to enhance regulatory consistency across the EU. However, as of 2024–2025, the primary responsibility for licensing and supervising crypto services remains with national competent authorities, and any options for direct ESMA supervision remain subject to discussion and potential subsequent legislation. This implies a likely tightening of requirements and stricter coordination for crypto market participants, including exchanges, wallets, and startups.

The key objective is to increase transparency and reduce risks associated with money laundering and the financing of illegal activities. However, these changes may lead to an increased burden on businesses and users, especially those working on cross-border projects.

Situation Analysis

What exactly did the European Commission propose?

The European Commission is discussing a review of MiCA and options to strengthen ESMA's role, including the possibility of centralized supervision for the most systemic market participants. However, the current version of MiCA assumes that authorization and supervision of most crypto-asset service providers are carried out by national regulators, while ESMA plays an important coordinating role and is responsible for developing regulatory technical standards and supervising the resilience of certain significant stablecoin issuers. Some states and industry representatives advocate for more centralized control at the EU level, believing it will increase market confidence.

How will MiCA change?

The MiCA review discusses strengthening several requirements, including:

• Licensing: MiCA already requires authorization for crypto services from national competent authorities with the possibility of "passporting" across the EU. The review is considering a more direct role for ESMA regarding systemically important participants, but a mass transfer of authority to ESMA for issuing all licenses has not yet been approved.
• Cybersecurity: Increasing data protection standards and requirements for storing user assets, including requirements for operational resilience and risk management.
• AML/KYC: The mandatory implementation of identity verification procedures and transaction monitoring remains a key requirement, but primary jurisdiction over anti-money laundering belongs to the anti-money laundering frameworks (the EU AML package, as well as directives and regulations at the EU level) and international FATF standards; MiCA supplements these requirements in terms of transparency and consumer protection.

Why is this important?

Against the backdrop of recovery and growing interest in crypto-assets on a global scale, EU regulators aim to bridge the gap with larger markets and increase the competitiveness of the European sector through uniform rules, greater transparency, and user protection.

Risks for the User

Who will be affected by the regulation?

• Exchange users: Stricter KYC/AML procedures may complicate platform access.
• DeFi projects: Possible restrictions on interaction with unregulated services and additional requirements for interface and bridge providers.
• Startups: Increased costs for compliance with new requirements and for obtaining authorizations in national jurisdictions.

Possible Inconveniences

• Account blocking: Platforms may freeze funds if there are suspicions of violating AML rules or sanctions.
• Difficulties working with unregulated wallets: Addresses associated with sanctioned individuals or criminal activity are often blocked or flagged by monitoring services, making fund transfers difficult.

How to Protect Yourself

6 Steps for Users

1. Check addresses before transferring
   Use services such as Etherscan (for the Ethereum network) or blockchain analytics tools (e.g., Chainalysis and other AML/transaction screening providers) to ensure there are no sanction tags or links to suspicious addresses.

2. Choose licensed platforms
   Work with exchanges and wallets that are registered and operate within the national legislation of the EU or have a clear legal structure in the EU and a transparent compliance policy.

3. Complete KYC on platforms
   This is not only a mandatory requirement on many platforms but also a way to minimize the risk of your funds being blocked.

4. Diversify asset storage
   Store long-term investments on hardware wallets, and funds for trading on reliable custodial platforms with a good reputation and regulatory compliance.

5. Monitor legislative changes
   Subscribe to updates from ESMA, the European Commission, and national regulators to stay informed about new requirements and their implementation deadlines.

6. Prepare tax reporting
   Stricter control increases the likelihood of inquiries from tax authorities; therefore, prepared and transparent reporting will reduce operational risks.

The Role of AML Screening

AML screening is becoming an essential tool for protecting your funds. It allows you to pre-check an address for the risk of interacting with "dirty crypto," sanctions, or links to criminal activity, reducing the likelihood of blocks and other issues during transfers.

Conclusion

Cryptocurrency regulation in the EU continues to evolve, making transparency and legal compliance key factors for all market participants. It is important for crypto-asset holders to adapt to new requirements by using verified platforms, implementing AML/KYC practices, and following updates from ESMA and national regulators. By following these recommendations, you can minimize risks and more effectively utilize the opportunities of the cryptocurrency market.