M&A in the crypto industry is coming to the forefront as Europe launches MiCA and the UK finalizes its own rules for the cryptocurrency market. The new reality is simple: getting a license is not enough; now companies must pay for compliance, risk control, client protection, and operational infrastructure for years. Similar pressure is also noticeable in North America: in the US and Canada, stricter requirements are also pushing companies toward partnerships, asset sales, or seeking a larger owner.
- MiCA is already shifting European crypto asset regulation from a license race to a phase of expensive ongoing compliance.
- Lawyers believe the UK model may be just as strict: crypto companies will be integrated into existing financial services rules rather than placed in a separate regime.
- Banks and large financial groups have an advantage because they already have control systems, capital, compliance, and experience working with client assets.
After MiCA, the Market Enters a Consolidation Phase
The European MiCA regime has become a major milestone for the crypto industry, but the main question now is not who was first to get authorization. What matters more is whether small crypto companies can withstand the cost of operating in a fully regulated environment.
The shift to ongoing supervision changes the balance of power. Startups that previously won due to speed and specialization are now forced to handle several expensive areas at once:
- Legal team costs.
- Implementation of internal procedures.
- Risk management.
- Reporting.
- Asset custody.
- User protection.
For some players, this may be a reason to look for a buyer, a partner, or to merge with larger structures.
The more expensive ongoing compliance becomes, the more the market moves toward consolidation: licenses, capital, and ready infrastructure become key arguments for M&A.
This is why mergers and acquisitions in the crypto sector may become a natural extension of regulation. The higher the entry threshold, the more scale, capital, and ready infrastructure are valued.
Internationally, such deals are increasingly evaluated through several practical factors:
- Regulation and finance: asset status, investor protection, lending rules, payments, and currency operations directly affect the structure of M&A.
- Digital assets: digital currencies, stablecoins, Bitcoin, and Ethereum are important for understanding how assets fit into banking processes.
- Regional context: for companies operating between Europe, the US, and US dollar markets, asset price and volatility are important.
- Infrastructure: blockchain technology and decentralization directly affect custody and settlement models.
- Market benchmarks: Coinbase as a major crypto exchange and Stripe, Inc. as a payment technology company are often discussed alongside banks when talking about infrastructure.
Who Most Often Becomes an M&A Target
Potential targets for deals are usually companies that already have what is hard and expensive to build from scratch:
- Crypto exchanges with a client base and working trading processes.
- Custodial services that can store digital assets and work with private keys.
- Infrastructure providers for banks, brokers, and payment companies.
- Startups with licenses or an almost ready regulatory base.
The attractiveness of such a target usually depends on several things: licenses, technological infrastructure, client base, compliance, and the ability to quickly integrate into the buyer’s processes.
The form of the deal can also vary:
- Full acquisition if the buyer needs the team, licenses, and clients.
- Purchase of specific assets when technology, client portfolio, or infrastructure are of interest.
- Strategic investments if a major player wants access to the market without full control.
- Merger when companies combine resources to withstand regulatory and scaling costs.
Asset Valuation and Risk Assessment
In digital asset deals, the target’s price depends not only on revenue or number of clients. The properties of the assets themselves are also important:
- Liquidity: how quickly the asset can be sold or used without significantly affecting the price.
- Volatility: how sharply the asset’s value changes.
- Legal status: how the asset is classified in the relevant jurisdiction.
- Technological security: how reliable wallets, smart contracts, and internal infrastructure are.
- Transparency of asset origin: whether it can be confirmed that assets are not linked to prohibited operations.
For tokens, stablecoins, and other digital assets, liquidity, legal status, and technological model are separately assessed for their impact on the future deal.
Due diligence for such a target is almost always more complex than standard financial due diligence:
- The origin of digital assets and transaction history must be checked.
- It is important to understand how to integrate the buyer’s and target’s IT infrastructure.
- There is a separate risk related to storing private keys and accessing wallets.
- When transferring assets, compliance, AML/KYC, and sanctions restrictions must be reassessed.
- Legal review should consider the transfer of digital assets, rights to blockchain technologies, disclosure, and intellectual property.
The British Approach Could Raise the Bar Even Higher
The UK is preparing its own crypto regulatory framework through the FCA. It is expected to be as strict as MiCA but structured differently: crypto activities must be integrated into the existing financial services regulatory system.
This is an important distinction. In the EU, MiCA creates a separate regime for the crypto asset market. In the British model, crypto companies will essentially operate within the same architecture as traditional investment firms. This means requirements for capital, operations, management, client assets, and risk control.
The FCA wants to support competition and is genuinely trying to help new market entrants. But the regulator’s standards are very high, especially regarding consumer protection, noted Steven Lightstone, partner at the London office of Morgan Lewis and co-head of the firm’s global fintech practice.
According to Steven Lightstone, using existing rules will make the British regime less like a separate crypto framework. A crypto company will be treated almost like a regular financial organization, and obtaining FCA authorization will still be a complex task.
For banks and investment companies that have long operated in such conditions, adapting to crypto services may be relatively straightforward. They already have compliance departments, control procedures, and experience interacting with regulators. But new crypto players will have to build all this almost from scratch.
Client Assets Become the Main Challenge
One of the most complex elements of the British regime may be the FCA’s approach to client asset custody. This involves applying CASS rules, which require separating client assets from the company’s own funds and formalizing such relationships through trust structures.
For the crypto market, there are additional specifics:
- Private key control.
- Reconciliations.
- Operational security.
- Procedures for digital assets.
This is not just a formality, but a full-fledged infrastructure that must be maintained daily.
CASS requirements are extremely tough. They may push new entrants to merge with a traditional company that already complies with these rules and has the necessary control mechanisms, believes Steven Lightstone.
This scenario seems logical. If a small crypto company cannot quickly and cheaply build the full set of processes, it is easier to become part of a financial group or partner with a player that already has licenses, capital, and proven procedures.
Banks Are Taking a Closer Look at Digital Assets
Consolidation may accelerate further because banks themselves have become more comfortable with digital assets. The less regulatory uncertainty, the easier it is for financial institutions to launch crypto-related products.
Today, less than 20% of European banks offer any crypto services. This means the market is still largely untapped, said Simon Schneider, CEO of Sygnum Europe.
Simon Schneider believes the main value of MiCA is not just in new types of licenses. Legal certainty, which banks have long lacked, is more important. When rules are clear, large financial organizations are more willing to invest in infrastructure and bring services to clients.
He cites Switzerland as a benchmark. After the adoption of distributed ledger technology legislation, major banks’ interest in crypto services increased significantly. Now, according to Simon Schneider, about three-quarters of the country’s leading banks already offer services related to digital assets. He suggests that Europe may follow a similar path over time.
At the same time, banks are unlikely to completely displace crypto-oriented companies. Another scenario is more likely: financial groups will rely on infrastructure providers to launch several areas:
- Custody.
- Brokerage services.
- Staking.
- Tokenization.
Sygnum Europe itself is increasingly focusing on regulated infrastructure for financial institutions rather than direct competition for retail clients.
We see a clear shift toward regulated organizations. Banks already have business relationships, distribution channels, and all the regulatory and compliance infrastructure, said Simon Schneider.
He also expects that some assets will flow to regulated providers as companies without MiCA licenses reduce their activities in Europe. At the same time, self-custody and institutional custody solutions, in his view, will continue to exist in parallel.
Cryptocurrencies in Corporate Strategies
Bitcoin, Ethereum, stablecoins, and other digital assets can influence M&A not only as a regulatory object. They can also be used in settlements between companies, included in treasury strategy, and serve as a tool for asset diversification.
If the target company has significant crypto assets, the buyer assesses their liquidity, volatility, legal status, and storage security. Such a portfolio can increase the target’s attractiveness but also complicates due diligence, integration, and asset transfer after the deal.
Consolidation also changes liquidity distribution. The more assets and clients move to regulated providers, the greater the role of large players. For users, this may mean broader access to services through banks and financial groups, but it becomes harder for smaller companies to compete without licenses, capital, and reliable infrastructure.
Scale Could Become the New Advantage
If the British rules are implemented as currently planned, they will reinforce the pan-European trend: the success of crypto companies depends less on technology alone and more on the ability to operate as a regulated financial institution.
For an industry that grew on the idea of fast startups challenging big players, this is a major shift. In the new competitive environment, the winner may not be the one who launches products faster, but the one who can withstand costs, audits, capital requirements, and ongoing supervision.
This is why the next wave of deals in the crypto industry may not be accidental but structural. Strict regulation increases the cost of independence, so partnerships, acquisitions, and mergers with banks are becoming not a backup option but a way for many companies to stay in the market.
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