As the EU continues to roll out landmark regulations like MiCA, PSD3, and the Financial Data Access (FIDA) framework, a critical question emerges: Are we regulating innovation effectively, or simply reacting to it?
The recent EBA No Action Letter on the interplay between MiCA and PSD2 is a clear signal that the current approach, regulating based on the type of technology or product, is reaching its limits. The letter offers temporary relief to crypto firms dealing with electronic money tokens (EMTs), but it also exposes a deeper issue: Regulatory Fragmentation.
A Better Way Forward: Trust-Based, Functional Regulation
Instead of creating a new silos for every emerging technology, the EU has an opportunity to pivot towards a more pragmatic, principle-based framework. One that focuses not on whether a service is "crypto" or "traditional", but on whether it meets the core tenets of financial regulation:
- Consumer Protection
- Market Integrity
- Financial Stability
This approach would allow existing regulations, like MiFID II, PSD3, CRR, the Prospectus Regulation, to be adapted and extended to new technologies such as tokenisation, DeFi, and AI-driven financial services. Article 60 of MiCA, which anchors EMTs to e-money rules, could serve as a template for this kind of functional alignment.
Why This Matters for the Financial Ecosystem
A trust-based framework would:
- Reduce regulatory duplication and compliance costs
- Encourage innovation by providing clarity and consistency
- Strengthen supervision by focusing on outcomes rather than form
It would also empower regulators to respond more flexibly to emerging risks, whether from algorithmic stablecoins, embedded finance, or AI-powered credit scoring.
How Grant Thornton Can Help
At Grant Thornton Malta, we are uniquely positioned to support this transition. Our multidisciplinary teams bring together expertise in:
- Regulatory Advisory: Helping clients navigate MiCA, PSD3, and cross-border compliance
- Digital Consulting: Supporting fintech and traditional firms in adopting emerging technologies responsibly
- Risk and Compliance: Conducting impact assessments, gap analyses, and regulatory reporting
- Financial Services Strategy: Advising on licensing, governance, and operational transformation
Whether you're a startup entering the EU market or an established institution adapting to change, we can help you build trust, stay compliant, and innovate with confidence.
Let's Build a Smarter Regulatory Future
The future of financial regulation in Europe should not be about chasing technologies, it should be about anchoring trust. Let's work together to shape a regulatory environment that is coherent, adaptive, and innovation-friendly.
Contact us to explore how we can support your journey through the evolving financial landscape.
