Europe\u2019s new digital asset regulation could help transform the ownership structure of the cryptocurrency sector.<\/p>\n
That\u2019s according to a report<\/a> Sunday (July 26) by CoinDesk, which says that companies are now facing the cost of doing business under the new Markets in Crypto Assets<\/a> (MiCA) rules that went into effect at the start of this month. That could lead to more\u00a0 mergers, acquisitions and partnerships between crypto firms and established financial institutions.<\/p>\n The report added that this trend could extend to Great Britain, where the Financial Conduct Authority\u2019s<\/a> (FCA) proposed framework for crypto is expected to institute standards similar to MiCA by linking crypto activities with Britain\u2019s existing financial services regulations<\/a>.<\/p>\n \u201cThe FCA is trying to help competition, and it really is trying to help newcomers,\u201d said Steven Lightstone<\/a>, a partner at Morgan Lewis\u2019<\/a> London office and co-leader of the company\u2019s global FinTech industry team. However, he added, \u201cit does have very high standards, particularly where consumers are involved.\u201d<\/p>\n CoinDesk noted that the U.K.\u2019s proposal \u2014 unlike MiCA<\/a> \u2014 would integrate crypto companies into the same regulatory standards covering traditional investment firms.\u00a0<\/p>\n \u201cAs it uses existing rules, it\u2019s going to be much less like a standalone framework,\u201d Lightstone said. \u201cA crypto firm will be treated like any normal traditional financial institution,\u201d adding that \u201cit will still be hard to get FCA authorization.\u201d<\/p>\n The report added that the prospect of more consolidation is happening as banks seem more open to embrace crypto<\/a> amid greater regulatory certainty.<\/p>\n \u201cAs of today, there is less than 20% of all the banks in Europe [that] offer today any type of crypto services, so it\u2019s heavily underserved,\u201d Syngum Europe<\/a> CEO Simon Schneider<\/a> told CoinDesk, arguing that MiCA\u2019s greatest contribution is offering financial institutions the legal certainty they have long been seeking.<\/p>\n In other crypto regulation news, PYMNTS wrote last week about efforts by regulators to offer financial institutions a clearer path to participate in stablecoin usage<\/a>.<\/p>\n The Federal Reserve has cautioned that stablecoin adoption could alter bank deposits, funding structures and the distribution of credit, that report said, making these instruments strategically important even to banks that haven\u2019t issued their own coins.<\/p>\n \u201cToday, stablecoins are like a drug trying to treat 20 different problems,\u201d Nium<\/a> Founder and CEO Prajit Nanu<\/a> said in a recent interview with PYMNTS.<\/p>\n