Regulatory Challenges: MiCAR Approval for Coinfinity and Growing Criticism of Prediction Markets

Coinfinity Receives MiCAR Approval After Months-Long Process

Austrian crypto company Coinfinity has received the coveted MiCAR license before year-end. With MiCAR taking effect at the end of 2024, the regulatory framework is clearly defined at the EU level, but in practice it has become evident that implementation depends heavily on national supervisory authorities ^[1].

Months of Uncertainty for Providers

Uncertainty was high for many providers throughout Europe and also in Austria, where proceedings at the Financial Market Authority dragged on for many months ^[1]. The now-granted approval has brought corresponding relief to Coinfinity.

CEO and co-founder Max Tertinegg makes clear in a press release how laborious the path to licensing was: "The MiCAR approval involved enormous effort – we worked intensively for many months to meet all legal, technical and organizational requirements" ^[1].

Legal Certainty for Business Operations

With the approval, the way is now clear to further develop the offering. Tertinegg also emphasizes the European context: "With the approval, the way is now clear to further develop our Bitcoin offering throughout Europe – secure, technologically reliable and customer-oriented" ^[1].

The granted license means above all legal certainty. Coinfinity can now continue its business operations without interruption and does not need to fear a regulatory standstill at the turn of the year ^[1]. The case exemplifies how strong the pressure of national implementation of European directives can become for companies ^[1].

Prediction Markets Under Regulatory Pressure

While traditional crypto companies struggle for licenses, another sector is increasingly coming under scrutiny from regulators: prediction markets. Hardly any industry segment within the crypto industry has experienced such a boom in recent months as prediction markets ^[2].

Through betting on real political, economic or social events, providers like Kalshi or Polymarket have struck a nerve and are recording enormous user growth, high trading volumes and billion-dollar fundings ^[2].

Allegations of Illegal Gambling

With the rapid boom, however, criticism of the platforms is also growing – manipulation, insider trading and repeatedly also the accusation of illegal gambling ^[2]. Regulators are sounding the alarm and asking the question whether these markets are actually operating illegal gambling ^[2].

There are many opinions on this topic. Some say it is illegal gambling, while others argue that it is a legal form of prediction ^[2].

Contrasting Developments in the Crypto Sector

Current developments show the contrasting challenges in the crypto sector: While established companies like Coinfinity fight for legal certainty through elaborate approval processes, new business models like prediction markets face the fundamental question of their legality. Both cases illustrate how complex and multifaceted the regulatory landscape for crypto companies in Europe has become.