MiCA 2 is the name the market has given to something that does not formally exist yet. There is no single draft regulation carrying that title, and no official in Brussels is obliged to use the term. What exists instead are two separate files that, taken together, could rewrite substantial parts of the Markets in Crypto-Assets Regulation less than two years after it became fully applicable. One is a supervision reform that is already in legislative negotiation. The other is a statutory review that will most likely end in a proposal to amend the regulation itself. This article sets out what each track contains, where the institutions currently stand, and what ventures building for the European market may reasonably plan for while the text is still being drafted.

What MiCA 2 Actually Is

The first track is the Market Integration and Supervision Package, which the European Commission published on 4 December 2025. It is a broad capital-markets reform, and only one part of it concerns crypto-assets, but that part is significant: the Commission proposed moving the authorisation and supervision of every crypto-asset service provider (CASP) from the national competent authorities to the European Securities and Markets Authority (ESMA). This file amends MiCA directly and is already with the co-legislators.

The second track is the review that MiCA requires of itself. Articles 140 and 142 oblige the Commission to report to the European Parliament and the Council on how the regulation is being applied and on developments it does not yet cover, accompanied, where appropriate, by a legislative proposal. The report is due by 30 June 2027. To prepare it, the Commission opened a targeted consultation on 20 May 2026, which closed in the autumn. Any proposal that follows is what most observers mean when they say MiCA 2.

The distinction matters in practice. The supervision reform could be agreed within months, while the substantive rewrite is still at the evidence-gathering stage. As we noted when the MiCA transitional period ended, the framework is binding but not finished, and the two tracks are where the unfinished parts are now being decided.

How the MiCA 2 Process Works

Neither track will produce binding rules quickly. The path from the current drafts to applicable law generally runs through five stages.

  1. Consultation and evidence: The Commission collects input from supervisors, industry and the public. For the review, this stage is complete, and the responses from ESMA, the European Banking Authority and the European Systemic Risk Board are public.

  2. Commission report and proposal: The Commission publishes its report under Articles 140 and 142 by mid-2027. A legislative proposal may accompany it, but the regulation only requires one where the Commission considers it appropriate.

  3. Positions of the co-legislators: The Parliament and the Council each agree a negotiating position. For the supervision package, this stage is well advanced. For the review, it has not begun.

  4. Trilogue negotiations: The three institutions negotiate a common text. This is typically where thresholds, exemptions and timelines change the most.

  5. Transition and application: Adopted rules usually apply only after a transitional period. The Council has supported a two-year handover for any transfer of supervision to ESMA, which suggests that supervisory changes are unlikely to take practical effect before 2028.

What the MiCA 2 Drafts Could Change

Although nothing is final, the published positions point in a reasonably consistent direction. Five areas stand out.

  • Supervision of the largest providers: The Commission wanted ESMA to supervise all CASPs. On 9 October 2026 the Council agreed the main elements of a narrower position under which only significant providers would move. According to press reports of the Council text, the test is at least 15 million active users in the Union, or three of five further criteria that include more than 1 million active users, more than €1 billion in crypto-assets under custody, and more than €4 billion in annual client transactions. Officials reportedly expect only 10 to 15 of roughly 360 authorised providers to qualify, with existing licences remaining valid. The Commission has said publicly that it regrets the compromise.

  • A regulated gateway to decentralised finance: In its response of 30 September 2026, ESMA recommended a new crypto-asset service for firms that give users access to DeFi protocols, together with clearer criteria for deciding which activities can be considered genuinely decentralised. The stated aim is to keep the exemption for fully decentralised services narrow, so that an interface operated by an identifiable firm does not fall outside the perimeter merely because the protocol behind it does.

  • Staking, lending and borrowing: ESMA described client lending programmes as effectively black boxes for clients and asked for disclosure obligations and express client consent. On staking, it argued for proportionate conduct and disclosure rules rather than a heavy new authorisation regime, on the basis that staking is an inherent function of proof-of-stake networks. The Parliament, in a resolution adopted on 7 July 2026 by 390 votes to 86, also asked the Commission to assess whether these services, along with non-fungible tokens and DeFi, should be brought under MiCA.

  • Token classification: ESMA asked for the power to issue binding opinions on how a token should be classified, including hybrid tokens. For issuers, this could replace a patchwork of national readings with a single answer, although it would also remove the option of choosing a favourable one.

  • Stablecoins and marketing: ESMA proposed explicit rules preventing authorised firms from offering services linked to stablecoins that do not comply with MiCA, stricter rules for crypto-asset marketing by influencers and other third parties, and stronger powers against third-country firms that solicit clients in the Union without authorisation. The consultation also asked directly whether stablecoins issued jointly by an EU and a non-EU entity should be permitted, a question on which the institutions have disagreed openly.

Not every proposal adds obligations. ESMA also recommended simplifying white-paper notifications, reducing duplicative authorisation steps for firms that are already regulated, and creating a framework for tokenized securities and on-chain settlement.

Where MiCA 2 Still Breaks

The most obvious weakness is timing. A report in mid-2027, followed by negotiation and a transitional period, means that substantive changes may not apply before the end of the decade. Markets in DeFi, staking and stablecoins are likely to look different by then, and rules drafted for the products of 2026 may fit poorly.

The second is coordination. The two tracks amend the same regulation on different timetables, and ESMA has asked for them to be fully aligned. If they are not, a provider could face one set of supervisory arrangements agreed in 2027 and a second set of substantive rules negotiated afterwards, each written without full sight of the other.

The third is that the central political argument is unresolved. The case for centralisation rests on uneven national practice. In July 2025, an ESMA peer review of the Malta Financial Services Authority found that parts of one CASP authorisation had not been assessed in sufficient depth, and the passporting system means that an authorisation granted in one member state gives access to all 27. Several member states nevertheless oppose transferring powers to Paris, and the Council compromise leaves the great majority of providers under national supervision. Whether that addresses the original concern is open to question.

Finally, defining decentralisation in law is difficult. A test that is too broad could capture developers who control nothing, while one that is too narrow may preserve the gap it was meant to close. No institution has yet published wording that clearly avoids both outcomes.

Institutions Worth Watching

  • European Commission: Holds the pen on the review. Its report under Articles 140 and 142 is due by 30 June 2027, and the decision whether to attach a legislative proposal rests with it.

  • ESMA: Its 30 September 2026 response is the most detailed public indication of what an amended MiCA could contain, and it would be the direct supervisor of the largest providers under either version of the supervision reform.

  • Council and Parliament: The Council agreed the main elements of its position on the supervision package in October 2026. The Parliament is finalising its own, and the trilogue that follows will determine the significance thresholds and the start date.

  • Malta Financial Services Authority: The subject of the 2025 peer review, and a useful indicator of how national authorities respond to closer scrutiny of their authorisation practices.

Conclusion

MiCA 2 is best understood as a direction of travel rather than a document: supervision of the largest providers is moving toward ESMA, and the activities that the first regulation deliberately left out are being drawn toward the perimeter. None of it is settled, and the negotiations ahead could still change thresholds, scope and dates considerably. For teams designing products that touch staking, lending, DeFi access or stablecoins, the prudent assumption may be that these features will carry disclosure and conduct obligations within the lifetime of what is being built today, and that the classification of a token will become harder to leave ambiguous. The drafting period is also the period in which informed input has the most effect. Ventures that follow the process now are likely to find the eventual rules easier to build on than those that meet them only at application.