The European Commission has launched a targeted consultation on whether the EU’s rules governing crypto-assets remain fit for purpose as the market develops and traditional financial institutions increasingly enter the sector.

The consultation concerns the Markets in Crypto-Assets Regulation (MiCA), the EU’s framework for crypto-assets and related services, which began applying in part on June 30, 2024, before becoming fully applicable on December 30, 2024.

The Commission services said stakeholders had until August 31, 2026 to respond through an online questionnaire, with feedback intended to help determine whether changes to the regulatory framework may be needed.

The consultation is not a formal legislative proposal, and the Commission stressed that the document represented the views of its services at this stage rather than a final policy position.

“The views reflected on this consultation paper provide an indication on the approach the Commission services may take but do not constitute a final policy position or a formal proposal by the European Commission,” the document stated.

The Commission said responses would help guide any future proposal and would be published according to the privacy options selected by respondents.

Only responses submitted through the official online questionnaire would be taken into account in the report summarising the consultation.

The Commission is seeking views from a broad range of stakeholders and said responses would be most useful where they included detailed explanations supported by data, concrete examples, legal references and other evidence.

It also invited respondents to suggest specific solutions to problems they identified, while saying participants should answer only questions relevant to them.

The review comes as crypto-assets and distributed ledger technology (DLT) have developed significantly since MiCA was designed and adopted.

DLT is the technology underpinning systems such as blockchain, allowing transactions and records to be shared across a network rather than being maintained by a single central authority.

The Commission said these technologies could enable faster cross-border payments, new ways of raising funds and innovative decentralised financial services, but also carried risks.

MiCA was introduced to provide greater legal certainty through a common EU framework, defining different categories of crypto-assets and establishing requirements for companies issuing them or providing related services.

The framework was also intended to support responsible innovation while addressing risks involving investor protection, market integrity and financial stability.

However, the Commission said crypto markets had changed substantially since MiCA was designed, while regulatory approaches in other parts of the world had also developed.

National regulators, European supervisory authorities and industry participants have shared their initial experiences of implementing the regulation, although the Commission said it was still difficult to reach firm conclusions about how well MiCA was working in practice.

The consultation will therefore compare the EU’s framework with newer regulatory approaches in other jurisdictions as well as developments in the crypto market itself.

The aim is to establish whether MiCA remains suitable as digital and tokenised asset markets continue to evolve.

The Commission also stressed that financial regulation should remain technology neutral, even while supporting innovation and greater use of digital technologies in European finance.

“Financial regulation should remain technology neutral,” the document stated, arguing that this was important to preserve freedom of choice for market participants rather than encouraging them to adopt a particular technology.

The Commission said technology-neutral rules would also allow financial regulation to adapt to technological advances without requiring major legislative changes each time new technologies emerged.

The review is also linked to an existing requirement under MiCA for the Commission to report to the European Parliament and the Council on developments in crypto-assets, particularly areas that were not originally covered by the regulation.

The Commission said the review of the EU’s payment services rules had already addressed and clarified some issues arising from the interaction between payment services legislation and MiCA, following advice from the European Banking Authority (EBA).

The consultation will therefore examine areas that were outside MiCA when it was adopted, as well as issues that have emerged since the rules came into force.

The Commission said it wanted to gather stakeholders’ views on market developments that MiCA did not originally cover and determine whether further policy or regulatory action might be appropriate.

It will also use the responses to inform the formal review of MiCA required under the regulation, in consultation with the EBA and the European Securities and Markets Authority (ESMA).

Another objective is to assess issues that have emerged during the implementation of MiCA so far.

The Commission said it also wanted to establish whether the framework was sufficiently prepared for the future as digital and tokenised asset markets become increasingly global and competitive.

This includes examining how the EU can benefit from the opportunities created by tokenisation and DLT while addressing the risks associated with them.

Tokenisation refers broadly to the process of representing an asset or rights connected to an asset digitally on a blockchain or another distributed ledger.

The Commission is also examining whether MiCA creates unnecessary administrative burdens for businesses and regulators.

As part of its wider agenda to simplify EU rules and support competitiveness, it said it wanted to identify requirements that could potentially be simplified, reduced or removed.

The consultation goes beyond crypto-assets directly covered by MiCA and also includes questions concerning the broader body of EU financial legislation.

Stakeholders can raise other relevant issues through an open question at the end of the questionnaire, with the Commission asking for responses to be specific and concise.

The first part of the consultation examines MiCA’s scope and definitions, including the rules governing crypto-assets other than asset-referenced tokens (ARTs) and e-money tokens (EMTs).

It asks about the conditions under which these crypto-assets can be offered to the public or admitted to trading.

The second part focuses on ARTs and EMTs and the requirements applying to their issuers.

Asset-referenced tokens are crypto-assets designed to maintain a stable value by referring to other assets or combinations of assets, while e-money tokens are designed to maintain a stable value by referencing a single official currency.

The Commission is seeking views on the rules governing the offering and trading of these tokens, their financial safeguards, and the model under which global tokens can be issued by multiple entities.

It will also examine how the EU framework interacts with regulatory regimes in countries outside the EU.

The consultation covers reserve requirements, which are intended to ensure that issuers maintain sufficient assets backing certain tokens, as well as the rights of token holders to redeem their holdings.

Crisis management arrangements for ARTs and EMTs are also included.

The third part examines whether the existing legal framework for CASPs remains appropriate.

CASPs include businesses providing regulated services connected with crypto-assets, and the consultation asks whether the range of services currently covered by MiCA remains adequate.

However, supervision of CASPs is outside the scope of this consultation because supervisory arrangements are being addressed under the current Market Integration and Supervision Package (MISP).

The fourth part examines areas that were outside the original scope of MiCA, including decentralised finance, crypto-asset staking, lending and borrowing, and non-fungible tokens (NFTs).

Staking generally involves committing crypto-assets to support the operation and security of a blockchain network in return for potential rewards.

The Commission is also asking whether MiCA should provide greater legal certainty for crypto-assets and other assets recorded on blockchains, particularly assets that are issued natively on such networks rather than representing an existing asset.

The consultation therefore represents a broad review of the EU’s approach to crypto regulation rather than a narrow examination of individual MiCA provisions.

The Commission said the responses would help it assess whether the current framework can continue to provide legal certainty and protect consumers and financial stability while allowing the market and underlying technologies to develop.

The consultation document itself cautioned that it was a working document of Commission services and did not prejudge any final decision the European Commission might take.

Any future changes to MiCA would therefore depend on the Commission’s assessment of the consultation responses and subsequent policy and legislative work.