What MiCA regulates
What it covers
Two groups, with different obligations.
Issuers of tokens, particularly stablecoins. Requirements cover reserve composition, redemption rights, published disclosures and regular reporting. The reserve has to be held in liquid low-risk assets, segregated, and available for redemption at par on demand.
Service providers, called CASPs: exchanges, custodians, payment gateways and anyone else handling crypto for customers. Requirements cover authorisation, capital, governance, complaint handling and safeguarding of client assets.
The stablecoin rules took effect in mid-2024 and the service provider regime followed at the end of that year, with transition periods varying by member state.
What MiCA does not cover
The list is useful, because the regulation gets credited with more than it does.
It does not prohibit holding crypto, and it does not restrict individuals transferring between their own wallets. It does not regulate networks or protocols: issuers and services are in scope, blockchains are not. It does not replace anti-money-laundering obligations, which run as a separate body of rules.
And it does not make USDT illegal. Regulated venues restricted it because continuing would have meant handling an asset that does not meet the issuer requirements, which is a different thing from a prohibition on ownership.
What it changed in practice
The consequence everybody noticed
Circle met the issuer requirements. Tether did not.
European exchanges and payment providers responded by delisting USDT or narrowing where it could be used, and USDC became the stablecoin European customers see at checkout. The comparison between the two is covered in the USDT versus USDC entry.
Nothing about USDT stopped working technically. What changed was the list of regulated venues willing to handle it inside the bloc, and that turned out to matter more than any technical property.
Outside Europe nothing changed at all. USDT remains dominant across Asia, Latin America and the CIS.
Passporting
The mechanism that makes MiCA commercially significant.
A provider authorised in one member state can operate across all twenty-seven without seeking separate permission in each. Before MiCA, serving the European market meant navigating twenty-seven regimes; now it means one authorisation.
That is a genuine simplification for anyone entering the market, and it raised the entry bar at the same time, since the single authorisation is more demanding than several of the national regimes it replaced.
What it means for a merchant outside the EU
Three practical points.
Selling to EU customers, you are not the regulated party
MiCA binds issuers and service providers. A business accepting payment for goods is neither, so the obligation sits with your gateway.
Which stablecoins to accept does change
If your customers are in the EU, offering USDC matters, because that is what they hold and what European venues support. Offering only USDT will cost you payments.
Your gateway’s status is worth asking about
A provider serving EU customers needs the authorisation, and whether yours has it affects your ability to settle there. This is a reasonable question to raise during onboarding, alongside the ones covered in the setup guide.