INTERVIEW: Can Europe’s Crypto Regulations Survive the Rise of Dollar Stablecoins?

In this interview with Impact Newswire, Wojciech Kaszycki, Strategy Advisor at Poland-based blockchain firm BTCS S.A. (WSE: BTF), argues that the European Union’s landmark Markets in Crypto-Assets Regulation (MiCA) is already showing signs of becoming outdated less than a year after its full implementation. He contends that the regulation was designed for a much smaller stablecoin market and is built on assumptions that no longer hold, as U.S. legislation, rapid market growth and new forms of tokenized money have reshaped the global digital asset landscape. Is that the case?

The European Union’s landmark Markets in Crypto-Assets Regulation (MiCA) became fully applicable at the end of 2025, establishing the bloc’s first comprehensive rulebook for crypto assets, including stablecoins. The framework introduced strict licensing, reserve, governance and consumer protection requirements for issuers of electronic money tokens (EMTs) and asset-referenced tokens (ARTs), with the aim of promoting financial stability while encouraging innovation.

However, less than a year after its full implementation, European policymakers are already debating whether MiCA requires revisions. Regulators have identified gaps around non-EU stablecoin issuers, tokenized bank deposits, decentralized finance and emerging payment models that have evolved more rapidly than the legislation anticipated. The review comes as U.S. dollar-backed stablecoins continue to dominate global crypto markets, raising concerns that Europe could become increasingly dependent on foreign-issued digital dollars despite MiCA’s objective of fostering a euro-denominated digital asset ecosystem.

The debate has intensified following the emergence of USD1, a U.S. dollar stablecoin associated with the Trump family through the crypto venture World Liberty Financial. Although USD1 is issued outside the European Union, it could still be accessible to European users through crypto exchanges and other intermediaries, highlighting questions over how MiCA should regulate offshore issuers whose tokens circulate within the bloc.

The discussion also coincides with efforts in Washington to establish a federal framework for digital assets through the CLARITY Act, legislation intended to clarify the regulatory responsibilities of U.S. agencies overseeing cryptocurrencies. While the bill focuses primarily on market structure rather than stablecoin regulation, it forms part of a broader U.S. push to provide clearer rules for the crypto industry. Analysts say differences between U.S. and EU regulatory approaches could shape competition in the global stablecoin market, particularly as dollar-backed tokens account for the overwhelming majority of stablecoin circulation worldwide.

European policymakers have argued that any revisions to MiCA should preserve financial stability and strengthen the international role of the euro, while balancing the need to remain competitive with rapidly evolving digital payment technologies. Industry participants are increasingly debating whether future reforms should focus on ensuring high-quality reserves, one-to-one redemption rights and interoperability across payment systems, rather than accelerating plans for a retail central bank digital currency.

Faustine Ngila spoke with Wojciech Kaszycki, Strategy Advisor at BTCS S.A. (WSE: BTF). Here’s the full interview:

1. MiCA was years in the making. What specific developments since it was drafted make you believe it is already obsolete, rather than simply incomplete?

Incomplete means missing chapters. Obsolete means your core assumptions no longer hold. MiCA has the second problem. It was drafted in 2019-2020, when stablecoins were a roughly 25 billion dollar curiosity, and it rests on two assumptions: that Europe would write the global rulebook and everyone else would follow, and that a stablecoin is essentially prepaid e-money, so you regulate it like 2010s e-money – no interest, bank-deposit reserve rules, usage caps for non-euro tokens.

Both assumptions failed. The market grew more than tenfold to around 300 billion dollars and became settlement infrastructure, with monthly on-chain transfer volumes in the trillions.

The US flipped from regulation-by-enforcement to federal legislation – GENIUS is law, market structure rules are advancing – and the “Brussels effect” never arrived. And the products the market actually wants- tokenized cash that earns yield, deposit tokens, globally fungible instruments- sit exactly where MiCA says no.

The scoreboard is brutal: three years in, not a single asset-referenced token has been licensed in the EU. An entire category of the regulation has zero users. The Commission’s own review consultation now questions the interest ban, the reserve mix and the treatment of global stablecoins. That is Brussels itself conceding the design assumptions, not just the coverage, need rework. I am compliance first – I run regulated businesses across several EU jurisdictions. My problem is not that MiCA regulates. It is that it regulates a market that no longer exists.

2. USD1 is still a relatively new stablecoin. What evidence suggests it poses a systemic challenge to MiCA instead of simply becoming another dollar-backed stablecoin competing in the market?

On its own, USD1 is not systemic – roughly 4 billion dollars in a 300 billion dollar market. What it proves is systemic. It went from about 125 million dollars at launch in spring 2025 to the fourth-largest stablecoin in the world in just over a year, on the back of institutional distribution, political proximity and post-GENIUS legitimacy – and at no point in that journey did it need Europe. It will not file for MiCA authorization, and it does not have to: European capital reaches it anyway, through offshore venues, DeFi and secondary liquidity.

That is the challenge – not the token, the template. License in the US, scale globally, treat the EU as an afterthought. Every future dollar issuer will copy it. Meanwhile, the delisting wave we have run in Europe since 2024 moved users, not risk: volume simply migrated to venues outside EU oversight. So MiCA’s perimeter works as a wall that keeps regulated European firms out of the deepest liquidity, rather than a shield that keeps risk away from European users. USD1 is a symptom. The disease is a rulebook that binds European institutions while barely touching the instruments European citizens actually use.

3. The U.S. CLARITY Act and Europe’s MiCA pursue different regulatory approaches. Do you expect this divergence to encourage regulatory arbitrage, with issuers gravitating toward the U.S. regime?

Let me be precise first: CLARITY has passed the House and cleared Senate Banking, but it stalled before the August recess, so it is not law yet. It does not matter much. GENIUS is law; the SEC and CFTC issued joint classification guidance in March, and issuers already behave as if the framework exists. The clearest tell is Tether – the company that publicly refused MiCA launched a US-regulated dollar token under the GENIUS pathway and is scaling it. The same issuer that walked away from Europe walked into the American regime voluntarily.

I would not even call this arbitrage – arbitrage sounds sneaky. This is rational domicile selection. On one side: federal clarity, the reserve currency and the deepest capital markets. On the other: 27 supervisors, an interest ban and reserve rules that even willing issuers struggle to love. The risk people miss is not foreign issuers avoiding Europe – most never intended to come. It is European founders and banks putting their stablecoin ventures under the US framework and serving Europe on the margin. The EEA passport is a genuine asset, but a passport only pays if the licensed activity is commercially viable. The fix is boring plumbing: a recognition or equivalence mechanism between the regimes – which the Commission, to its credit, has finally put on the table – so the choice of jurisdiction stops being binary.

4. Dollar-backed stablecoins account for the vast majority of global stablecoin supply, while euro- and pound-backed stablecoins remain a small fraction of the market. Is this simply a reflection of the U.S. dollar’s dominance in global finance, or do European and UK regulations make it harder for local-currency stablecoins to scale? Can policymakers realistically reverse that trend?

Both – in that order. The dollar’s share, over 99 percent of supply, primarily reflects what stablecoins are today: offshore dollars for a world that wants dollar savings and dollar settlement. Crypto’s unit of account is the dollar. No regulation created that and no regulation will quickly undo it. But Europe and the UK add friction precisely where a challenger currency needs help. MiCA’s interest ban is broader than the American one – it covers issuers and service providers – while the US ecosystem routes economics to holders through exchanges and tokenized money market funds, and euro float earns roughly half the rate to begin with. Reserve rules push 30 percent of backing, 60 percent for significant tokens, into uninsured commercial bank deposits. The UK is further behind: the regime is not even live, and the Bank of England opened the conversation with proposed holding caps. You do not scale a currency people are only permitted to hold in small amounts.

The numbers tell the honest story: MiCA-compliant euro stablecoins grew 128 percent in a year – to roughly 674 million dollars. Impressive growth rate, microscopic base, about 0.2 percent of the market. Can policymakers reverse dollar dominance? No. Can they stop handicapping their own currency? Absolutely. The realistic goal is euro tokens winning euro-native use cases – European B2B payments, FX corridors, on-chain settlement of European securities – not global dominance.

5. If Brussels revises MiCA to cover non-EU issuers more explicitly, how would that work in practice for U.S.-issued stablecoins that are traded globally but not directly issued within the EU?

There are only three real options, and Brussels is discovering the limits of each. First, regulate the point of access – exchanges and intermediaries. That is what MiCA does today; it produced the delistings, and volume migrated to non-EU venues and DeFi. Second, extraterritorial prohibition – demanding that non-EU issuers of globally traded tokens obtain EU authorization. Unenforceable against a bearer-style instrument on public blockchains; you cannot geofence a chain, you can only regulate regulated touchpoints. Third, the live debate: multi-issuance and recognition.

The Commission’s consultation, open until the end of August, acknowledged for the first time that multi-issuance – the same token issued by an EU entity and a non-EU affiliate, fungible across both – is not actually prohibited by MiCA, and floated an equivalence regime for third-country issuers. The ECB’s objection deserves to be taken seriously: in a run, global holders will redeem wherever redemption rights are strongest, which is inside the EU, and could drain the EU reserve pool while EU supervisors effectively carry third-country liabilities.

The workable landing zone is conditional recognition: fungibility permitted where the foreign regime meets agreed standards on reserves, redemption and disclosure, with binding rebalancing and burden-sharing obligations between co-issuers, and supervisory data-sharing so the EU can see global circulation, not just its slice. In practice, GENIUS-regulated issuers would be the natural first candidates – and that is also Europe’s leverage to demand reciprocity for EU issuers in the US market. Anything stricter than this is theatre. Anything looser is the risk the ECB is right to flag.

6. You argue Europe should prioritize 1:1 convertibility, reserve quality and interoperability. Does MiCA already provide an adequate framework for these principles, or are the shortcomings primarily in implementation and supervision?

Three principles, three different verdicts – it is worth being precise. On convertibility, MiCA is genuinely strong. Permanent redemption at par is in the text, and it is the single most important consumer protection in this market. Keep it, defend it, export it.

On reserve quality, the problem is design, not implementation. Requiring 30 percent of reserves – 60 percent for significant tokens – to sit in commercial bank deposits swaps sovereign risk for uninsured bank credit risk. March 2023 taught us that the depeg came from the banking system, not from Treasury bills. The rule also concentrates the entire sector in a handful of banks willing to hold these deposits. That needs a redesign in the review.

On interoperability, MiCA is simply silent: no multi-issuance clarity, no equivalence path, no technical standards. These words appear for the first time in the current consultation. And then there is supervision, where implementation genuinely failed: one rulebook, 27 authorities, wildly uneven timelines. My home market is the case study. Poland went through a legislative deadlock and a presidential veto and reached the end of the EU transition period in June without a functioning national licensing path, while other member states were processing authorizations in months. Polish teams, mine included, ended up building their MiCA footprint through other jurisdictions. So my scorecard reads: convertibility – keep. Reserves – redesign. Interoperability – write it. Supervision – centralize more of it.

7. Some policymakers view euro-denominated stablecoins as strategically important for protecting Europe’s monetary sovereignty. Should regulators actively promote euro stablecoins over dollar-backed alternatives, or should users be free to choose whichever asset they trust most?

Users should be free to choose – full stop. You do not defend monetary sovereignty by restricting what your citizens may hold; that teaches them to route around you, and we have already run that experiment with the delistings. Frankly, I would also push back on the reflex in Frankfurt of warning that euro stablecoins could weaken bank lending. Treating the digital form of your own currency as a threat is a strange definition of sovereignty.

The legitimate role of policy is to make the euro option winnable, not mandatory. Remove the self-inflicted handicaps in the review. Give banks legal certainty to issue – the consortium of major European banks planning a shared euro stablecoin for later this year is exactly the kind of initiative to enable, not slow down. Use euro tokens in wholesale settlement pilots. And let the digital euro do what private issuers cannot – serve as the guaranteed public fallback for retail – instead of positioning it as their competitor.

Sovereignty is earned in the market. If the best-regulated, most liquid, most useful token for European commerce happens to be a euro token, users will choose it without being told to. The moment you promote by prohibition instead, the euro becomes sovereign over a shrinking on-chain territory.

8. Looking ahead five years, do you expect the stablecoin market to remain overwhelmingly dollar-centric, or could regulatory reforms such as MiCA revisions create a genuinely competitive ecosystem for euro- and other non-dollar stablecoins? What would need to change for that to happen?

Dollar-centric, still – I would bet on an 85 to 90 percent dollar share in 2031, against more than 99 percent today, in a market several times larger; mainstream bank forecasts cluster around one to two trillion dollars by 2030. That sounds like defeat, but it is not. Even a 5 percent euro share of a 1.5 trillion dollar market is a 60 to 75 billion euro ecosystem – transformative for European payments and capital markets, against well under one billion today.

Five things need to change, none of them mysterious. One: a MiCA review that fixes reserve composition and rethinks the blanket interest ban, or at least creates room for regulated yield-bearing structures alongside payment tokens. Two: recognition and equivalence with the US and UK, so global fungibility is legal rather than grey. Three: banks actually shipping – consortium euro tokens live, integrated into corporate treasury and ERP flows, not press releases. Four: euro-native use cases, above all on-chain settlement of European securities and B2B corridors where the invoice is already denominated in euros. Five: a digital euro that coexists with private tokens instead of crowding them out. 

The consultation closes at the end of August, and the legislative review will land around 2027. If it lands with ambition, Europe gets a genuinely competitive regional ecosystem by 2030. If it does not, we will have achieved something remarkable: the most comprehensively regulated stablecoin market in the world, with almost no stablecoins in it.

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