Why Fintechs Prefer MiCA Over UK Rules: Innovation, Clarity & Financial Crime Risk

As the global financial services sector undergoes rapid transformation, fintech companies are increasingly calling for regulatory clarity to enable innovation, support growth, and enhance international competitiveness. A growing debate has emerged around whether the U's current approach provides the right environment for fintechs, particularly when compared to the European Union’s Markets in Crypto-Assets Regulation (MiCA). Many fintech firms appear to favour a MiCA-style framework, arguing that the UK has yet to create the predictability and scale necessary to unlock sector growth. This article examines how the two models compare, explores which offers the most effective foundation for fintech innovation, and analyses the critical role of financial crime risk in shaping the regulatory landscape.

Understanding MiCA: A Unified EU Framework

MiCA, which came into force in 2023 and became fully applicable in 2024, represents the European Union’s most ambitious effort to regulate crypto-assets and related services. It establishes a single licensing regime across all 27 member states, covering crypto-asset issuers, wallet providers, crypto exchanges, and stablecoin issuers. MiCA's objectives are to provide legal certainty, ensure consumer protection, maintain market integrity, and safeguard financial stability.

Importantly, MiCA sets out clear authorisation and operational requirements. Stablecoin issuers, for instance, face stringent reserve obligations, while all crypto service providers must meet defined prudential, organisational and conduct standards. Enforcement is shared between the European Securities and Markets Authority (ESMA) and national regulators. For fintech firms operating across multiple jurisdictions, MiCA’s single authorisation model - often referred to as 'passporting' - offers a substantial advantage. Once authorised in one EU country, a firm can operate across the entire European Union without needing separate approvals, thereby reducing compliance complexity and minimising the risk of regulatory arbitrage.

Comparison of Cryptocurrency Legislation

The UK’s Approach: Fragmented & Evolving

Since Brexit, the UK has pursued an independent and notably more incremental approach to regulating crypto-assets and fintech innovation. Major legislative developments have included the Financial Services & Markets Act 2023 (FSMA 2023), which extended the UK's regulatory perimeter to cover certain crypto activities, treating digital assets as regulated financial instruments where appropriate. The Financial Conduct Authority (FCA) introduced a Crypto-Asset Promotions Regime in late 2023, requiring firms to ensure that any financial promotions are clear, fair and not misleading.

Throughout 2024, the Treasury consulted on a broader framework for regulating crypto-assets, including proposals to bring custody and trading activities under FCA supervision and to regulate stablecoins under payment systems law. As of 2025, although elements of this framework are being implemented, the UK's regulatory landscape remains fragmented and uncertain. Fintech firms continue to criticise the regime for lacking clarity and predictability, factors which create significant barriers to investment, product development and operational scaling.

Moreover, authorisation processes under the FCA are still viewed as slow and opaque. This uncertainty leads to delays, additional compliance costs, and lost commercial opportunities. Fintech companies also face a higher compliance burden compared to what would be required under a unified model like MiCA. Many argue that the FCA’s approach, while grounded in consumer protection, tends towards excessive caution, inadvertently stifling the very innovation the UK seeks to promote.

Fintech Preferences: Why MiCA is Appealing

An increasing number of fintech firms, from early-stage start-ups to more established players, are openly advocating for the adoption of MiCA-style regulation in the UK. One of the most compelling reasons is regulatory certainty. Clear and consistent standards from the outset enable firms to plan long-term strategies, secure investment, and develop new products with confidence.

International market access is another significant factor. MiCA’s passporting regime allows firms to scale operations across the entire EU from a single authorisation, which is a considerable operational and commercial advantage. Furthermore, MiCA is seen to strike a reasonable balance between managing risks and supporting innovation. It protects consumers and markets without resorting to overly restrictive measures that could inhibit technological progress.

Companies such as Ripple have highlighted MiCA’s clarity and market access benefits when expanding their European operations. Similarly, Circle, the issuer of the stablecoin USDC, secured a MiCA-compliant licence in France, citing regulatory certainty as a decisive factor in their decision.

Financial Crime & Crypto-Assets: An Added Layer of Complexity

Introducing financial crime considerations into the debate between MiCA and UK legislation further complicates the analysis. Crypto-assets, by their very nature, are highly susceptible to financial crime risks, including money laundering, terrorist financing, fraud, sanctions evasion, and ransomware payments. Their decentralised, pseudonymous characteristics make them attractive to illicit actors seeking to exploit gaps in regulatory oversight.

Both MiCA and the UK's evolving frameworks recognise these threats, but they approach them differently. MiCA incorporates anti-money laundering obligations for crypto-asset service providers by requiring robust customer due diligence, record-keeping, and suspicious activity reporting measures. It also mandates governance frameworks to prevent market abuse, such as insider trading and price manipulation. However, MiCA largely defers to existing EU anti-money laundering directives, meaning that while it strengthens financial crime controls, it does not create a standalone, crypto-specific AML regime.

The UK, by contrast, subjects crypto businesses to the Proceeds of Crime Act 2002, the Money Laundering Regulations 2017, and oversight by the FCA’s AML supervision regime. UK-authorised crypto firms must already comply with comprehensive AML obligations, including the obligation to register with the FCA and undergo stringent assessments. However, critics argue that the UK's regime has been inconsistent in its application, with significant delays in registration and perceived variability in supervisory intensity. Moreover, enforcement against non-compliant crypto firms has been relatively limited, raising concerns about the overall effectiveness of the regime in practice.

When it comes to tackling high-risk crypto activity, MiCA’s prescriptive licensing requirements create a clearer, more uniform baseline across member states. Firms must implement risk management frameworks, governance structures and transparency obligations at the outset, reducing opportunities for arbitrage and misconduct. By contrast, the UK’s current framework still relies heavily on case-by-case assessments and post-hoc enforcement, creating opportunities for inconsistent outcomes and leaving gaps that bad actors could exploit.

The financial crime risk profile of crypto-assets also raises fundamental questions about market trust and consumer confidence. From this perspective, MiCA arguably holds an advantage by mandating comprehensive white paper disclosures and offering regulatory certainty around stablecoins and custodial services. These measures seek to close loopholes that have previously enabled frauds and market manipulation. In the UK, while consultations have aimed to improve disclosures and consumer protections, the regulatory framework remains incomplete, and uncertainties persist regarding the treatment of high-risk innovations such as decentralised finance.

Crucially, the question of enforcement capacity must also be considered. The European Union benefits from coordination between ESMA, the European Banking Authority, and national competent authorities, strengthening oversight and reducing the risk of regulatory arbitrage. The UK's enforcement bodies, despite their strong expertise, operate with comparatively limited resources and without the benefit of multilateral coordination across a broad single market.

Is the UK Moving Toward a MiCA-Style Model?

There are signs that the UK is reassessing its position. The Treasury’s ongoing regulatory reforms propose structures increasingly aligned with MiCA, particularly in defining activities that require authorisation and in establishing consumer protection obligations. The Bank of England and the FCA are also working to regulate stablecoins used in payment systems, further mirroring elements of the European framework.

Nonetheless, the UK faces structural limitations that MiCA overcomes. Without access to a passporting regime post-Brexit, UK-authorised firms must navigate a fragmented global market without the benefits of seamless cross-border operation that EU firms enjoy. Unless the UK negotiates specific trade agreements or equivalence frameworks, this disadvantage will persist.

Conclusion: Regulation, Financial Crime & Market Confidence

For fintech firms seeking immediate opportunities for innovation and rapid growth, MiCA currently provides a superior framework. Its clarity, consistency, and scalability across a large and economically significant market offer tangible benefits that the UK's evolving but fragmented system does not yet match.

When financial crime risks are considered, MiCA’s approach to creating a consistent and predictable compliance environment further strengthens its appeal. Although MiCA imposes higher upfront compliance obligations, it offers firms the certainty needed to maintain market trust, secure investment, and expand operations sustainably.

In contrast, the UK’s regulatory environment, while flexible and ultimately capable of adapting to emerging technologies, remains uncertain and fragmented. This undermines investor confidence, discourages innovation, and risks diminishing the UK’s long-standing position as a global fintech leader.

To maintain its competitive edge in 2025 and beyond, the UK must deliver a comprehensive, predictable, and internationally competitive regulatory framework without delay. Failure to do so will result in further erosion of its attractiveness to fintech innovators, particularly those committed to robust financial crime controls and sustainable growth.

Let’s Shape the Future of Fintech Together

At OpusDatum, we believe regulatory change is an opportunity, not a barrier. Our team partners with fintechs to navigate complexity, strengthen financial crime defences, and unlock sustainable growth.

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