EU Crypto Regulations 2025

The European cryptocurrency market was valued at USD 6.9 billion in 2024 and is expected to reach USD 27.6 billion by 2033—a compound annual growth rate (CAGR) of 14.94% from 2025 to 2033.

Several European jurisdictions have emerged as popular destinations for leading crypto businesses, offering special laws for investor protection, blockchain courses at universities, and hosting blockchain events. Moreover, the EU introduced a harmonized regulatory framework for the crypto industry, making it easier for crypto businesses to operate within the union.

Starting December 30, 2024, the licensing and authorization phase of the Markets in Crypto-Assets (MiCA) regulation commenced. Crypto Asset Service Providers (CASPs) will be required to apply for licenses to operate within the European Union. 

Apart from MiCA, other laws regulating crypto are in force in the EU in 2025. To help businesses navigate complex crypto regulations in Europe, we’ve compiled this guide.

How is the EU regulating crypto?

The European Union has been among the most developed regions in terms of crypto adoption and regulation, protecting businesses and investors with a comprehensive framework for digital assets. The EU’s approach balances innovation with risk mitigation, addressing concerns related to money laundering, fraud, and consumer safety. The introduction of the Markets in Crypto-Assets (MiCA) regulation is the key aspect of the EU’s crypto regulatory landscape in 2025.

The list of EU crypto regulations in force in 2025

1. Markets in Crypto-Assets (MiCA) Regulation (MiCA; Regulation (EU) 2023/1114) establishes uniform EU-wide regulatory rules for issuing and trading crypto-assets, including transparency, disclosure, authorization, and supervision of transactions and the activities of crypto-asset service providers (CASPs). It covers the authorization and licensing of CASPs, requiring them to follow the rules on governance, financial stability, and operations. MiCA also addresses consumer protection, better informing consumers about associated risks, market integrity, and compliance with AML/CFT rules. MiCA started to apply on December 30, 2024; however, each EU member state established a transitional period allowing CASPs that provided their services in accordance with applicable law before 30 December 2024 to continue to do so until a specific date. Such a period may not extend beyond 1 July 2026.

Check out this detailed guide on MiCA to learn the details of this regulation.

2. Transfer of Funds Regulation (TFR; Regulation (EU) 2023/1113) provides the Travel Rule, mandating the sharing of specific information about the originator and beneficiary during fund transfers. The TFR requires CASPs to collect data about the originator and beneficiary of transfers, verify and share it with counterparties to manage risks in crypto-asset transfers; implement EDD measures on third-country counterparty CASPs; verify control or ownership of unhosted wallets; comply with AML/CFT measures; etc. The Travel Rule is mandatory for all CASPs incorporated in the EU from 30 December 2024.
3. Digital Operational Resilience Act (DORA; Regulation (EU) 2022/2554) aims to strengthen the information and communication technology (ICT) security of financial entities and ensure that the financial sector in Europe is able to remain resilient in the event of a severe operational digital disruption. DORA brings harmonization of the rules relating to digital operational resilience for the financial sector. It started to apply on January 17, 2025.
4. The Anti-Money Laundering Directive 5 (5AMLD; Directive (EU) 2018/843) adopted in 2018 aims to prevent AML/CFT risks by requiring CASPs to implement robust and relevant measures. The 5AMLD requires checking customer identities, using a risk-based approach, continuously monitoring transactions, keeping detailed records, and having internal policies to prevent CASPs from being used for money laundering or terrorist financing.

Is cryptocurrency legal in the EU?

Yes, cryptocurrency is legal across the European Union, but it’s not considered an official currency or legal tender.

The EU has standardized rules under MiCA, which establishes licensing requirements for crypto service providers (CASPs), stablecoin issuers, and trading platforms. This ensures that crypto businesses operate under a clear and consistent legal structure within the region.

However, individual member states may still have different implementations of regulatory frameworks and different taxation rules.

The timeline of the European crypto regulations

• 2018: The EU introduces the 5th Anti-Money Laundering Directive (AMLD5), requiring crypto exchanges and wallet providers to comply with Know Your Customer (KYC) regulations.
• 2020: The European Commission proposes the MiCA framework as part of the Digital Finance Strategy.
• 2023: MiCA is officially adopted by the European Parliament, setting forth licensing requirements and consumer protection measures.
• 2024: MiCA starts to apply from 30 December 2024
• 2025: Transitional periods for compliance begin, with grandfathering period continuing until July 1, 2026 for some jurisdictions.

What is the EU regulating?

The EU is regulating three main types of crypto assets:

• Asset-referenced tokens
• E-money tokens
• Other crypto assets, such as utility tokens.

The union’s regulatory approach covers multiple aspects of the crypto industry, including:

• Licensing requirements: Any business providing crypto-related services or dealing with digital assets within the EU requires a MiCA license. This includes companies involved in crypto-asset exchanges, custody, issuance of crypto assets, operation of trading platforms, crypto-related investment consultations and portfolio management, etc. (this list is not exhaustive).
• Stablecoin issuance: Strict regulations apply to stablecoins to ensure they are backed by sufficient reserves and remain stable in value.
• Consumer protection: Transparency requirements mandate that crypto businesses disclose risks associated with investments.
• Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF): The risk-based approach that includes Customer Due Diligence, Enhanced Due Diligence, and reporting requirements is mandated for crypto transactions within the framework of AMLD5.
• Market integrity: The EU regulations mandate prohibitions against insider trading and market manipulation within the crypto industry. MiCA prohibits insider dealing, unlawful disclosure of inside information, and market manipulation related to crypto assets. MiCA also prohibits entering into transactions, placing orders to trade, or engaging in any behavior that is misleading regarding the supply, demand, or price of a crypto asset. This includes employing fictitious devices or disseminating misleading information.
• Travel Rule: The implementation of the crypto Travel Rule is mandated within the framework of Regulation (EU) 2023/1113 (TFR).

Travel Rule requirements in the EU

The Travel Rule mandates that crypto transactions include originator and beneficiary information. 

In the EU, the TFR Regulation (EU) 2023/1113 (TFR) provides the Travel Rule, mandating the sharing of specific information about the originator and beneficiary during fund transfers. The TFR requires CASPs to collect data about the originator and beneficiary of transfers, verify and share it with counterparties to manage risks in crypto-asset transfers, implement Enhanced Due Diligence (EDD) measures on third-country counterparty CASPs, verify control or ownership of self-hosted wallets, etc.

Data to be shared includes:

a) Full official name: As documented on an official government-issued document. For legal persons, use the registered name.

b) Distributed ledger address and crypto-asset account number: If the transfer is registered on a DLT network, include the distributed ledger address and the crypto-asset account number if it exists and is used. If not registered on a DLT network, provide the crypto-asset account number.

c) Address and identification (originator only): For natural persons: habitual residence, including the country name, official personal document number, customer identification number, or date and place of birth. For legal persons: registered office address.

d) Legal Entity Identifier (LEI) or equivalent identifier: Include the current LEI or another official identifier if available in the message format and provided by the originator to the crypto-asset service provider. The alternative identifier must: i) be a unique identification code for the legal entity; ii) be published in public registries; iii) be automatically issued upon entity formation by a public authority; iv) allow identification of name and address elements; v) be accompanied by a description of the identifier type in the messaging system.

There’s no threshold in the EU for the Travel Rule. Cryptocurrency businesses incorporated in the union are required to capture information regarding the identities of both the originator and beneficiary for all crypto asset transfers, regardless of the transaction size. This means that unlike the United States, which has a threshold of $3,000, the EU mandates that crypto businesses identify the originators and beneficiaries of all crypto asset transfers.

Moreover, in the EU, self-hosted wallet verification is required for transactions exceeding EUR 1,000.

Suggested read: What is the FATF Travel Rule? The Ultimate Guide to Compliance

How to stay compliant

Crypto businesses operating in the EU must take the following steps to ensure compliance:

1. Before obtaining the license: A CASP must ensure its adherence to applicable requirements under MiCA.
2. Obtain licensing: Register with the appropriate regulatory bodies and secure necessary approvals under MiCA.
3. Implement strong KYC and AML measures: Conduct thorough identity verification and monitor transactions for suspicious activities.
4. Adopt FATF Travel Rule compliance solutions: Use crypto transaction monitoring tools to track and report transactions as required.
5. Ensure transparency and consumer protection: Provide clear disclosures on risks, terms, and conditions to customers.

It’s important to consult local legislation of the EU member states to make sure crypto businesses remain 100% compliant in the jurisdictions where they operate.

FAQ

• What is the MiCA regulation in the EU?

  The MiCA regulation in the EU is a comprehensive legal framework that establishes uniform rules for crypto assets, issuers, and service providers to ensure investor protection and market stability.

• What are the new rules for crypto in Europe?

  The new rules for crypto in Europe under MiCA require Crypto Asset Service Providers (CASPs) to obtain licenses, enhance consumer protections, and follow transparency requirements.

• How is crypto regulated in the EU compared to the US?

  Crypto regulations in the EU vs the US differ in that the EU has a unified framework (MiCA), while the US follows a fragmented approach with different agencies enforcing regulations based on asset classification. Besides, in the US, the SEC imposes a standard capital gains tax, while EU member states have different tax rules for cryptocurrencies.