Regulation
OKX Europe boss sees more crypto mergers with MiCA rules – DL News
- The EU cryptocurrency sector will consolidate as larger players gain a foothold.
- OKX has chosen Malta to strengthen its presence in the EU.
- B2C2, on the other hand, says it will go to Luxembourg to access the fund market.
The EU’s new cryptocurrency regulatory framework will see larger firms absorb smaller ones as it becomes easier to gain a foothold in the Union.
Cryptocurrency market regulation will standardize rules across the EU, making it easier for large non-European companies to enter, OKX Europe managing director Erald Ghoos said DL News.
“Small operators with licenses in Europe know that once MiCA is in place, they will not be able to compete with larger, more technologically advanced operators,” Ghoos said.
“So they’re up for sale, they’re looking to be acquired. There’s going to be a lot of consolidation after MiCA.”
Second largest market
The MiCA licensing scheme will allow companies based in one country to offer their services to the whole EU27.
This means that companies must carefully consider where to locate to best access the world’s second largest cryptocurrency market.
According to the EU, 17.6%, or about $1 trillion, of global cryptocurrency transactions were recorded between 2022 and 2023. Catenalysis.
“All those licenses in some of those countries that have well over 100 cryptocurrency registrations, they’re going to disappear.”
— Erald Ghoos
Countries like Poland, Czech Republicand Lithuania have registers full of small businesses and even individuals.
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These countries have attracted companies seeking licenses where they find the licensing process simpler and regulatory oversight more lax.
For example, Lithuania has 588 so-called virtual asset service providers, while Germany, considered a more stringent regulatory environment for cryptocurrencies, has only 22, according to recent data from VASPNet.
“All those licenses in some of those countries that have well over 100 cryptocurrency registrations, they’re going to disappear” once MiCA is established and the companies are bought out or shut down, Ghoos said.
Respected Hubs
OKX itself was supposed to make Paris its European hub ahead of the implementation of the EU cryptocurrency regulatory framework.
Instead the exchange will go to Malta.
This is a further indication of the dynamics that will reorganise Europe’s competitive map with the entry into force of MiCA.
Companies like OKX weigh a variety of pros and cons when choosing their base.
OKX ultimately found Malta more attractive than Paris, as the exchange already had a Maltese office, a license and a relationship with the local regulator, Ghoos said.
Malta’s current regime is not that different from MiCA, “so we believe the increase over our current licence will be quite slight and minimal to reach the new MiCA standards,” he said.
OKX plans to increase its staff in Malta from 60 to about 100 to support its European operations, Ghoos said.
He admitted that it might be more difficult to find talent in a smaller country.
Malta has a population of 500,000.
But, he said, Malta “is a beautiful island in the Mediterranean, it’s very attractive for expats: it was easy to convince people to come and join us here.”
However, large cryptocurrency exchanges tend to focus on large cities like Paris or Dublin.
For example, exchange giant Coinbase, he chose to get his license in Dublin, which has a young, educated workforce and is already home to tech giants like Google, Meta and Apple.
Pariswhich has already implemented a framework similar to MiCA, has also attracted companies such as Circle and Crypto.com.
New markets
For other companies, access to new markets is an attraction.
Denzel Walters has just moved from London to Luxembourg to run an office in the tiny duchy for B2C2.
B2C2, the world’s largest crypto-native liquidity provider, wants to appeal to European asset managers, Walters said.
“We are really excited to see how the fund industry develops,” he said.
Luxembourg is particularly well positioned in this respect, he said.
Of the €9 trillion in assets managed by the EU in UCITS funds (a popular investment vehicle), €5 trillion are domiciled in Luxembourg.
“Our hope is that as the market develops and takes its first steps into the cryptocurrency world, they will partner with B2C2 for over-the-counter liquidity,” Walters said.
The fund industry is still not comfortable with the idea of investing in cryptocurrencies, and the same goes for its banking partners.
Walters therefore hopes that MiCA will help banks feel more confident that B2C2 has good governance and anti-money laundering controls in place.
Contact the author at joanna@dlnews.com.