EU at Risk of Becoming Crypto “Flyover Zone”

Franklin Templeton executive Catriona Kellas, addressing the DigiAssets 2025 conference, warned that the EU’s pioneering role in crypto regulation could be jeopardised as the U.S. and Asia-Pacific (APAC) adopt faster legislative approaches.

In Brief

• EU risk of becoming “flyover zone” as U.S. and APAC crypto regulations advance more rapidly.
• MiCA regulation places EU initially “forefront” but flexibility concerns arise.
• European Commission reportedly recognising the “competition” risk.
• “MiCA 2” update is anticipated to address current concerns.

Evaluation of MiCA

Franklin Templeton’s International Legal Lead for Digital Projects, Catriona Kellas, while acknowledging the EU is in a “strong place” for crypto regulation, cautioned that the bloc could become a “flyover zone” between the U.S. and APAC.

“Jurisdictions which were at the forefront a few years ago can easily fall behind,” Kellas argued, citing regulatory approaches perceived as more flexible elsewhere.

MiCA 2 Incoming?

Kellas noted a shift within the European Commission, recalling internal discussions using the word “competition” for the first time.

“They’re definitely asking the right questions,” she observed. There are “more than whispers” about an update, “MiCA 2,” potentially addressing concerns.

DLT Pilot Program

Despite MiCA’s initial leadership, Kellas highlighted the EU’s DLT (distributed ledger technology) pilot program as another initiative. She noted officials are “trying to renovate and make sure that it’s fit for purpose.”

Broader Implications

Analysts suggest the crypto industry isn’t waiting for Europe. Recent reports indicate exchanges Coinbase (targeting Luxembourg) and Gemini (targeting Malta) are pursuing licenses to operate across the EU via a process called “passporting.”

While some EU regulators express concerns about the pace of passporting approvals, Kellas anticipates ongoing global regulatory evolution driven by market realities.