MiCA and the Rise of Merchants’ Trust in the Crypto Payments Industry – Is It Possible?

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The European Union is poised to take a significant leap forward with the introduction of the MiCA (Markets in Crypto-Assets Regulation).

Volumes have been said about transparency, utmost protection, clear regulation of stablecoins and a potential influx of investments into the crypto market.

But seldom ever tackled the question of crypto payment development in light of upcoming changes.

After MiCa comes into force, we can expect a significant spike in the willingness of low-risk businesses to enable crypto payments – and there are a lot of reasons behind it.

Coverage is finally closed to global

Crypto payment gateways always make an accent on global coverage.

But before MiCA, the regulatory environment for crypto payments in the EU has been a mosaic of national laws and interpretations – BanFin in Germany, AMF in France, DNB and AFM in the Netherlands, CNMV in Spain, CONSOB in Italy, MFSA in Malta and FIU in Estonia.

The lack of a cohesive regulatory framework has resulted in inconsistencies, presenting significant challenges for cryptocurrency payment providers seeking to expand their services across different countries within the European Union.

As a result, without a separate license obtained for each European jurisdiction, crypto payment providers could not fully satisfy the demand of merchants that seek to cover all countries through a single provider.

MiCA regulation will help businesses within the crypto payments domain solve these issues and provide seamless services to their customers by going through the process of passportization within each country.

Merchants will be able to enable crypto payments across the targeted countries by striking a deal with a single crypto payment provider and indeed get coverage that is close to global, as promised.

Regained trust in the industry will force businesses to accept crypto to get a competitive advantage because

The lack of a unified approach toward regulation allows for market manipulations, which might have undermined consumer trust and hindered the broader acceptance of cryptocurrencies.

The urgency for regulators to enforce crypto regulations globally has heightened in the aftermath of the scandalous FTX collapse, when the crypto market capitalization plummeted, reaching a two-year low of $736 billion on November 9, 2023, and has started its slow recovery not so long ago.

The investors appeared to be unprotected while the industry proved itself as not as reliable as it needs to be to bring its solutions to the masses.

No doubt, there’s always been an issue of credibility of the sector not only for investors but also for financial institutions like banks that don’t properly work with the players and often deny opening bank accounts due to the lack of the required transparency and control over the industry.

However, the lack of trust in the crypto domain as a common phenomenon also affects consumers, merchants and payment service providers’ willingness to use, accept and provide new channels to operate money.

Consumers don’t express the demand for crypto payments and don’t consider this payment method as a competitive advantage that would make them choose a store with crypto payments over a store with traditional payment options only.

Merchants do not need to spend time and effort on implementation to enable something that wouldn’t impact their position in the market.

The crypto industry is expected to regain trust and create a basis for the integration of crypto as an everyday payment habit.

Once it happens, the demand for crypto payments will be dictated by the end consumer who after expressing overall interest in the crypto sector will need to make a step forward and find further implications of crypto in real life.

Crypto.com in its report stated that the global number of crypto owners soared by 34% and reached 580 million despite the economic crisis and other macro headwinds.

With these numbers at hand, we understand that crypto payments will soon become a competitive advantage that businesses will be integrating for greater retention, and MiCA regulations will strengthen this trend.

Stablecoins are the clearest means of payment for low-risk industries – strict regulations will propel their use for everyday purchases

A lot of attention is given to the process of regulation of stablecoins, especially EMTs (e-money tokens).

EMT, the value of which is supposed to mirror the value of an official currency, makes it easier for consumers to use it for everyday payments.

The overall rise of the stablecoin economy indicates that a growing interest of investors is already here.

Over the last month, stablecoins capitalization surged, experiencing a $4.9 billion growth between December 30, 2023, and January 30, 2024.

Stablecoins’ potential has long been a subject of interest for the EU parliament.

In 2021, among all the advantages of stablecoins, they stressed the ease of public access, the implication of stablecoins in overseas payments to reduce the processing costs, their use in international trade to reduce fees and increase speed and the creation of faster and inclusive global payment arrangements.

At that time, there was no universally accepted regulatory framework that would ensure customer protection and the required level of transparency.

MiCA’s regulation will bring clarity to the question of price formation and consumer protection by ensuring that e-money tokens can be redeemed at the price of a currency backing the token anytime at no cost.

This will stimulate even greater adoption of EMTs for everyday payments.

Final words

Though the MiCA regulatory framework is a leap towards a safer future, both the crypto and public sectors should equally participate in implementing the provisions of MiCaR.

If achieved, the new license regime will entail that crypto payment providers may have more low-risk customers instead of high-risk customers.

Max Krupyshev is the CEO and co-founder of CoinsPaid, a crypto payment solution for businesses registered in Estonia. Having entered the crypto world in 2013, Max stood at the origins of this market in Ukraine, launching a Bitcoin foundation to promote crypto adoption in the country. As the CEO of CoinsPaid, he sets the goal for the company to become the connecting link between crypto and traditional businesses.

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