# Navigating the Legal Landscape: Crypto Regulation in 2025 and Beyond

- Channel: [Dappcon](https://streameth.org/dappcon)
- Date: 2025-06-18
- Duration: 22:15
- Watch: https://streameth.org/watch/6852e75390bd41297be127bb

## Description

with Patrick Hansen, Jacob Senftinger, Karan Aswani, Marina Markezic

## Transcript

So, welcome, we're here to talk about crypto regulation in 2025 and beyond. I have here a great panel that covers topics that have been discussed in the crypto legal space for a while now. And before I start with getting into the individual areas, I'm curious to know from each of you, what is the current state of implementation of MECA? Do I start? Hi, everyone. So, what is happening at the moment is that MECA is applicable. That means that when it comes to stablecoins specifically, Patrick will say more about it, it's already applicable. So, it means that stablecoin issuers in the EU have to be compliant with MECA. The second part that regulates issuance of tokens and also stablecoin, basically service providers, so CASP as we call them, it really depends on the member state. Some member states have already implemented MECA or they have this deadline that has already expired and it basically is implemented. For some, it depends. I think that the last one is going to be, let's say France is one of them, that the deadline for the application is going to be in a year, so end of June 2026. Until then, all the crypto service providers have to be compliant with MECA. So, that's very briefly. Of course, we have a lot of other open questions. There's a lot of discussions between national competent authorities themselves because those are the ones that are supervising and giving licenses and we do have 27 of them plus 3 in the European Economic Area. So, you can think that they might not be, you know, the discussions might not be identical with all of them and there are some open questions at the moment where we see that they might be differently answered by different national competent authorities. So, this is maybe a challenge at the moment. Yeah, from my angle, hi everyone, I'm Patrick. Great to be here and certainly a difficult fast follow for us, right? Straight after Vitalik and to jump right into MECA, but from my point of view, it's going well. So, as Marina mentioned, for stablecoins, it's been roughly a year now. There are roughly a dozen MECA compliant stablecoins out there, both on the Euro side, on the dollar side, we're super proud to be the largest MECA compliant issuer for now and we have invested a lot of resources into that. On the stablecoin side, there's still a few, I would say, discussion topics like the interplay between the payments regulations that apply to EMPs or not and the EDA has recently published an opinion on that and that remains a big topic for the different national authorities on how to implement that. And I think overall, what we've seen is that MECA is being implemented as expected at the end of the day. The companies are applying for their licenses, those tokens that have decided not to seek regulations are slowly but surely being delisted and clarity is provided by the authorities where needed. So, I think on the regulatory side, it's proceeding. On the market side, it's way too early to tell whether this entire endeavour is successful or not, right? We have to let it settle, I think, for a year or two or three and then probably come back here and look at what are the volumes at MECA regulated casks? Are they able to tap into global liquidity? What are volumes of MECA regulated stablecoins? How are they being used in Europe and what are the regulatory barriers to that? So, on the market side, I think it's way too early, but a promising start. Yeah, hi everyone, I'm Jacob. I'm helping the product team at SAFE kind of steer the new environment and they were facing the challenges around interfacing with decentralized products and protocols and if that is kind of a centralized bottleneck that might fall into certain kinds of regulations and yeah, I'm working with the product team and I feel like we have found a path for ourselves, but I guess it's the challenge that it's a very modular kind of platform that we have and we always have to dig deep into the different features that we plug into our platform basically and understand that they are truly decentralized and then steer clear of MECA regulation. Hi everyone, I'm Karin. I'm at Nosis and coming more, I guess similar to Jacob, coming more from a kind of decentralized infrastructure perspective, I think it's still unclear where MECA is going to fit in to all of that. There's still questions around how DeFi might be caught. We've already seen diverging opinions from different regulators on how they view that and that remains to be seen how it plays out across the rest of the member states. I think it's also too early to say how successful or unsuccessful MECA has been because many countries within the EU still haven't even implemented their local laws to give effect to that. So there's many places in Europe where if you try to apply for a MECA license, you literally cannot today because there isn't even an authority that's designated to supervise that. The other thing which will be really interesting to see I think is how many registered VASPs actually make that conversion over to CASPs because I think there's a few thousand that were registered before MECA came into force and there's only, I would say, 20 or so that are regulated as CASPs today. So there'll be, I think over the next 12 to 18 months, a lot more visibility on the willingness of projects to be fully compliant, whether it makes sense for them to pursue that kind of full licensing regime in Europe or whether we start to see more kind of regulatory arbitrage in places like the US where there's a much more favourable environment or other jurisdictions that are trying to attract more projects and create more favourable environments. So definitely still wait and see, but still a lot of unanswered questions in respect to how MECA might apply to defi, sub-custody and other products and services that remain core to the values of decentralization. And Jakob, you mentioned the modular system that SAFE is using. MECA does not define what decentralization is. So how do you navigate in this landscape? Right, so the core is obviously self-custody, so that is obviously a big benefit that we have, but then we try to help our users to interact with defi protocols and there we try to understand what are we implementing and at what level and there we have like a modular approach where we have SAFE apps that can be onboarded in our app store, but we also have deeper integrations and there we're currently exploring how deep can we integrate and kind of be on this sliding scale between a perfect UX and, yeah, handing over to another service clearly showing, okay, this is now the responsibility of somebody else and not us. And Marina, you speak with regulators, you are the bridge to the industry with the European Crypto Initiative, so where do you see us moving to? There is a savings and investment union that is arriving. What other regulations should builders and developers be aware of? Yeah, so in the previous mandate, the European Commission was really focused on MECA. They were discussing the anti-money laundering laws and the travel rules, you have heard, very focused on crypto assets. Now this is done for them. So in Brussels, more or less, they have already decided this, the big decisions and the licensing is really happening on a national level, but with the new commission starting with the new year 2025, they are focusing on tokenization. This part, I think, could be interesting for the industry just because it's something that many projects are looking into, connecting DeFi, ThreatFi, similars, but at the same time, there are questions that are opening up, mostly on the infrastructure level. So thinking about, are there any limitations for permission as blockchain to be used in tokenization when it comes to tokenizing bonds and shares, etc. Of course, this is where we come in and try to explain that it's perfectly fine and this should be done, of course, but there are questions opening up. And this is a new thing because in the past, we, again, mostly discussed the crypto assets in a way, nature. So is it a security, a utility, etc. And now we go more into the technical aspect, which is pretty interesting in a way. And you might have heard also of the recent European Data Protection Board guidance on blockchain, how to use GDPR when it comes to blockchain, and those are really strict as well. It's not a regulation, just to be clear. It's really just a guidance for now, a draft. We have responded. If you're interested, you can go on our website, EUCI, and find the responses there. But it is something that needs to be answered, and I think it does require the industry to go and talk to regulators and explain the potential of this industry, this tech, for it to be used in different industries, and specifically within the EU, where we do have a pretty strict data regulation, not only financial regulation. So it's also a topic that needs to be addressed. Maybe I can just add to that, like GDPR is definitely one aspect. We're already starting to see other forms of regulation emerging, which are going to have an impact on this industry, right? So we're seeing things like DORA, the Digital Operations Resilience Act, that has a major impact on regulated financial services providers. So that's, in addition to MECO, in addition to payment services or MIFID, it brings a new level of regulatory compliance. And there's also proposals now to introduce cyber resilience regulations for products that fall outside of the scope of financial services, where you need to have sufficient overview and due diligence on the entire supply chain of technology providers that make up the tech stack through which you provide your services. And that raises new questions. So if TradFi now wants to access DeFi, how do they comply with those measures? Who do they go to? In many cases, DeFis are run by communities or DAOs. So it's going to present some challenges. But I think the message is that MECO was one aspect. GDPR has been there for some time, which there's always been that conflict between data protection and blockchain. Now we're starting to see other elements that are also going to have regulatory impacts on the industry. So Karan, we heard last week from the US that DeFi platforms should not be – should not have regulatory barriers. So where do you see DeFi heading the next months or years? I'm still very bullish on DeFi as a technology and what it gives people access to. I think that we will still continue to see innovation around the world. For the moment, I think we're in a space, at least in Europe, where there doesn't seem to be too much enforcement. But there are differing opinions within different member states as to where DeFi should fall. I think everyone was under the impression that MECO wasn't there to regulate DeFi. And so far, it's not. But this is where there's different interpretations on who is an intermediary, right? To Jacob's point earlier, there's an interface qualifier as an intermediary that should be caught under MECO. I'm not sure what the answer is there, but I think we still have a lot of work to do as an industry to make sure that we carve out a path for DeFi, because it is true to the values of blockchain permission. There's credit to be neutral and access to everyone, which many aspects of the traditional financial system still exclude a large proportion of the population. And Patrick, when we see the expansion of Circle during the past six years, why MECO was discussed and finally implemented, and when we see how liquidity pools and DeFi are decentralized, where do you see a possibility for European stablecoins to gain significant market share? And is it realistic? I'm relatively optimistic, but obviously, I don't think we should expect a hockey stick development overnight. I think it's rather steady and slow growth that we'll see over the next few years. We're quite encouraged ourselves by recent growth of the URC, our Euro-denominated stablecoin, which essentially, when we launched it under MECO officially, roughly a year ago, it was around like 30, 40 million market cap. Now, at least, we're at roughly 160, 170, I believe. So there has been some growth, and part of it was powered by DeFi. So I personally think that as those different worlds converge, for example, DeFi is more integrated into fintech, so the DeFi mullet thesis to some extent, but also into trash files. So as people start, for example, collateralizing their crypto assets to take out a loan and finance their house or their car or whatever, I think this will increasingly happen in the currency those people use on a day-to-day basis in their jurisdiction. And here in the Euro area, it's the Euro. So I expect some growth there. Same for, you know, real-world payments use cases, like cross-border transfers. I do think that, for example, once we build those on-chain FX pools, let's say, USDC, EuroC, or other stablecoins, you will have increasing volumes and increasing usage of Euro stablecoins also for that part. Even if the actual transfer happens in different stablecoins, you need the Euro for the on particularly strong, let's say, the Euro area and, you know, North Africa or Turkey or like Southeastern Europe, I do think that the Euro stablecoins will increasingly see usage as a cross-border payments tool. So let's wait and see. I don't want to sound too bullish, but I think there are some real-world use cases, both in DeFi and cross-border payments and capital market settlement, where the Euro will play a major role. Are there any thoughts from the panel? I think that's a huge opportunity also for the crypto space in general. We are also very closely looking at this, and it stands for kind of this merge of two worlds. And I think the challenge will be to kind of identify these new intermediaries that come out of our space and kind of find a way how they can best interact with the old guard, so to speak. And I think we are on the right path here, and stablecoins stand for that. And there's more to be clarified on the product side, on the application side, and that's where we need more clarity that Mica so far does not bring. But I'm optimistic that we will get there with good products. Just to add one tiny thing. I think what's increasingly important also for Mica and Europe is we have settled this framework, right? And so I think we should start, and increasingly we should start looking outside of Europe and find ways how to make this framework compatible with other global jurisdictions, major financial jurisdictions, because this is where then the real power sits, in my opinion. We're talking about stablecoins, cryptoassets, DeFi, inherently, natively global services and products. And so Mica alone won't take us too far. But if we find a way, for example, to make Mica compatible with the upcoming US rules, UK rules, Singapore, et cetera, to allow for cross-border usage of those assets, cross-border usage of regulated services across the board, I think this is where the real power waits. So, I would like to close our discussion with some final thoughts from all of you. So, if you would have some ideas for developers or builders, what should they be aware of during the coming months or years? I think first and foremost, it depends on what you're building, right? If you're building a trading application, you're building some kind of synthetic savings coin, or you're building a lending protocol, there's going to be much more regulatory implications in those types of products. So, I think you need to have a very clear idea, first and foremost, what it is you're building, and at an early stage in product development, understand where the regulatory touchpoints are, because there's a lot of evolution in the regulatory landscape today. And you might build a product which is amazing, and there's demand for it, but you might get stuck with regulatory limitations going forward when you want to distribute that product. So, my message to builders is, at a very early stage, start thinking about these questions. Start speaking to people who understand what's coming, what's already in place, so that you don't find these blockers in the future. Maybe I would say, think about the market and go-to-market strategy as well. So, if you are interested in the European market, you would need to look into the regulations, as you mentioned. Think about not only MECA, but as Kern mentioned, there are regulations that are touching upon the tech itself. There might be exemptions for, let's say, open source, et cetera, but it's not that if you don't have any crypto assets or similar, there's no regulation that applies to you when it comes to offering services or products in the European Union. So, I think that the EU is quite an attractive, interesting market. It's pretty big as well, and thinking about that in advance, in early stages, could help as well in the dissemination of the product. So, I would say I'm incredibly excited about all things payments. So, one thing that I would look into is, for example, stablecoin checkout experiences and online commerce. I think there's a lot of room for improvement there. On-chain FX markets, I think, are a key foundation for whatever cross-border payments might happen in the future. And then lastly, and this is potentially a little bit connected to regulations, added services for on-chain payments or stablecoin payments, settlement of tokenized assets, like services around chargebacks or fraud and how to handle all of that requires, I think, deep knowledge of on-chain infrastructure, but at the same time, European and international payments rules, and I think there's a lot of stuff to build there. So, and allow me one maybe shameless plug, we're obviously super excited about supporting any builders, developers in this space. We have built on Circle developer services platform, Discord, so feel free to check that out and hopefully we can support you as well as possible. Yeah, and I would just add, if you're starting off, don't let this complex regulatory environment kind of scare you off. I think if you're passionate about a problem that you want to solve, just get it started and don't let the lawyers scare you. If you have a good solution, you will figure out a way how to navigate this, if it's by partnering with somebody that has a license or if it is by going more into the infrastructure route that is less prone to falling under financial services. I think there will always be a way and yeah, don't let it stop you and keep building. So, thank you all for your thoughts. I'm sure we have taken something valuable from it and yeah, if you have questions, don't hesitate, we are around. Thank you. Thank you.