- EU officials have raised concerns over Malta’s early Markets in Crypto-Assets (MiCA) licensing approvals
- The European Securities and Markets Authority has begun assessing Malta’s compliance with MiCA standards
- Questions have emerged about whether Malta’s rules create unfair advantages for crypto firms seeking EU-wide access
European regulators are re-examining Malta’s initial wave of crypto licenses under the EU’s new Markets in Crypto-Assets (MiCA) framework, amid concerns that the country’s fast-tracked approach could give firms a backdoor into the broader European market. The European Securities and Markets Authority (ESMA) is assessing whether Malta’s regime aligns with both the letter and spirit of the law, as fears grow that inconsistent enforcement could undermine MiCA’s goal of robust, bloc-wide oversight. If Malta’s licensing is seen as overly lenient, it could allow crypto firms to sidestep tougher jurisdictions by securing approval there and passporting their license across the EU. The episode has reignited concerns about regulatory arbitrage and cast doubt on the integrity of MiCA’s single-market vision.
Concerns Over “Gateway” Licensing
Malta, long known for its crypto-friendly stance, became the first EU country to begin granting MiCA-compliant licenses, awarding one to exchange OKX in January. While the move has been praised by some in the industry for providing regulatory clarity, others worry that Malta’s requirements aren’t as strenuous as those of other countries, meaning it could set a precedent for regulatory arbitrage within the bloc.
According to officials familiar with the review, ESMA is particularly concerned about whether Malta’s licensing standards are rigorous enough to meet MiCA’s investor protection and anti-money laundering requirements. If a firm receives approval in Malta, it can passport its license to operate across the EU, which raises the stakes for how those initial licenses are granted.
“Race to the Bottom” Fears
Industry observers have warned that if Malta is perceived as offering a softer path to compliance, it could trigger a “race to the bottom” among smaller EU jurisdictions eager to attract crypto business. Others, however, defend Malta’s position. “We’ve simply been quicker to act on a regulation that’s now EU law,” said a representative from Malta’s Financial Services Authority.
Malta’s approach may become a litmus test for how MiCA will be implemented and enforced across the EU. As the regulation takes full effect by the end of 2025, consistency among national regulators will be critical. If Malta’s licensing process is seen as lax, it could undermine MiCA’s goal of creating a unified crypto regulatory framework.
