Germany leads the European Union in the number of crypto licenses granted under the Markets in Crypto-Assets (MiCA) framework.
Yet industry practitioners warn that strict enforcement by regulator BaFin is pushing startups and crypto-native firms toward rival jurisdictions like Austria and Portugal.
BaFin's Strict Enforcement
More than 30 crypto licenses have been issued in Germany — far more than nearly any other EU member state. Luxembourg, by comparison, approved just three.
But most of those German licenses went to traditional banks offering narrow services such as order execution or transfers.
The startups building next-generation digital asset infrastructure are increasingly licensing elsewhere and passporting services back into the German market.
Germany added 16 new MiCA-licensed institutions in Q4 2025 alone. The figure, however, masks a pattern: established financial players dominate, while crypto-native companies look to friendlier regulators abroad.
The country also shortened the standard 18-month MiCA transition window to 12 months, setting a hard deadline of Dec. 31, 2025, for all crypto-asset service providers to obtain CASP authorization under BaFin. That compressed timeline added to the compliance burden on smaller firms.
Also Read: Ethereum Eyed For Euro Stablecoin Settlement Layer
Matthias Steger on Berlin's Decline
At a recent expert council on MiCA and crypto regulation, Matthias Steger, a crypto tax advisor who has engaged directly with Germany's Federal Ministry of Finance, offered a blunt assessment.
"We lost our big hubs in Berlin and in Frankfurt," Steger said. "And I think that's not depending on MiCA itself. It's depending on how we Germans use and work with the MiCA rules."
The core issue, according to Steger, is not the regulation itself but Germany's interpretation of it. He urged BaFin to dial back its approach, arguing that MiCA should serve as the regulatory floor — not the ceiling.
What Is MiCA?
The Markets in Crypto-Assets Regulation is the EU's first comprehensive legal framework governing crypto-assets. The European Commission proposed it in Sept. 2020 as part of a broader digital finance package. The European Parliament approved MiCA on Apr. 20, 2023, and it entered into force in June of that year. Rules covering stablecoins took effect on Jun. 30, 2024, and the full framework for crypto-asset service providers became applicable on Dec. 30, 2024. MiCA establishes uniform licensing, disclosure and conduct requirements across all 27 EU member states, replacing the patchwork of national rules that previously governed the sector.