Crypto Exchanges Race for MiFID II Licenses as EU Rules Take Hold

• Crypto exchanges are securing MiFID II registration to offer regulated derivatives in the EU.
• Kraken, Gemini, and OKX have recently obtained MiFID II licenses, and Coinbase is also pursuing registration.
• MiFID II was not initially designed for crypto but now applies to derivatives under the MiCA framework.

A growing number of crypto exchanges are securing registration under the EU’s second Markets in Financial Instruments Directive (MiFID II) as they seek to secure their future in Europe.

Unlike the dedicated Markets in Crypto Assets (MiCA) regulation, MiFID II was not initially designed for crypto. However, it has become essential for firms looking to offer regulated crypto derivatives, including options and futures.

What is MiFID II?

Introduced in 2014, MiFID II is the EU’s regulatory framework for financial markets and investment services.

The directive, originally intended for banks, asset managers, brokers, and trading venues, governs firms that deal with financial instruments.

Since most cryptocurrencies do not meet the directive’s definition of financial instruments, crypto exchanges initially slipped through their regulatory net.

However, following MiCA’s full implementation on Dec. 30, 2024, crypto derivatives have come under MiFID II’s regulatory umbrella.

Crypto Exchanges Embrace EU Regulation

Since February, several major international crypto exchanges have either acquired or received in-principle approval for a MiFID II license.

Leading the way, Kraken obtained registration through the acquisition of a Cypriot investment firm.

Shortly after, Gemini announced it had secured in-principle approval to offer crypto derivatives across the EU.

Most recently, on March 12, OKX confirmed it had also received the license.

Coinbase is following suit, having disclosed last year that it is seeking to acquire a MiFID-licensed entity to expand its European derivatives offerings.

The string of registrations reflects a major regulatory push among EU crypto exchanges.

Under MiCA, exchanges have up to 18 months—depending on their base country—to comply with licensing requirements.

Europe’s Evolving Crypto Derivatives Market

Before MiCA, crypto exchanges offering derivatives operated in a regulatory gray area, allowing them to function without MiFID II authorization.

OKX European CEO Erald Ghoos noted that the landscape has now changed.

“Back in the day, before there was coherent regulation […], there were crypto exchanges offering derivatives and futures products that were unregulated,” Ghoos added.

He continued that the approach is no longer possible because of MiCA.

However, “there is still a user demand among people who want to be able to short, to leverage trade,” Ghoos explained.

“By having that [MiFID II] license, we are able to offer those products and that range of services to European users in a regulated manner,” he added.

The newly regulated environment entails significant changes for the crypto sector.

Ghoos pointed out that the newly regulated EU crypto space is a different beast from what many traders may be familiar with.

Gone are the days of “crazy leverage” of 100x or more. “We cannot do those things anymore as a regulated institution,” he observed

However, for OKX, at least, he suggested that the loss of the most high-risk trading instruments has done little to suppress overall demand.