Why MiCA Is Not Technologically Neutral: A Critical Analysis of the Mandatory Reference to DLT
MiCA speaks the language of technological neutrality, yet it legally defines crypto-assets through their reliance on distributed ledger technology – turning a supposedly function-based regime into one that is structurally tied to a specific architecture.
By making DLT a constitutive element of the “crypto-asset,” MiCA does more than regulate economic behaviours: it builds a technology-bounded legal category. This article unpacks how that architectural choice undermines true neutrality, distorts the regulatory perimeter, and reshapes the relationship between European financial law and its underlying infrastructures.
Introduction
The Markets in Crypto-Assets Regulation (MiCA) presents itself as a technologically neutral framework intended to regulate digital assets on the basis of their economic function rather than their underlying technical design. The rhetoric of neutrality is a familiar feature of European digital policy, appearing in instruments ranging from the GDPR to the Digital Services Act. It expresses a principled commitment to future-proof regulation, competition fairness and innovation openness. Yet a close reading of MiCA reveals that this neutrality is only partial. The regulation defines the crypto-asset exclusively through its reliance on distributed ledger technology (DLT) or similar technologies. This definitional anchoring has far-reaching conceptual, regulatory and market consequences.
This article argues that MiCA, far from being technologically neutral, embeds a structural preference for DLT-based architectures. By making DLT a constitutive criterion of regulatory scope, the EU has chosen not merely to regulate a class of economic behaviours, but to construct a technologically bounded legal category. This choice cannot be justified solely on functional grounds. It reflects a deeper normative and political alignment between European digital finance policy and the technological paradigms associated with blockchain. The result is a regulatory framework that is both over-inclusive and under-inclusive, capturing assets not because of their risk profile but because of their technological encoding, while excluding assets that share the same economic functions but rely on non-DLT infrastructures.
The following analysis examines the doctrinal implications of MiCA’s DLT dependency, evaluates its compatibility with the principle of technological neutrality, and explores the structural risks that arise from a classification system grounded in technology rather than function.
I. The Conceptual Anchoring of MiCA in Distributed Ledger Technology
MiCA defines a crypto-asset as a digital representation of value or rights that can be transferred and stored electronically using distributed ledger technology or a similar technology. This formulation places DLT at the normative centre of the definition, conditioning regulatory applicability on the technical medium in which the asset exists.
This anchoring is significant because it diverges from traditional European financial regulation, which historically defines regulated instruments through their legal and economic characteristics rather than their technological substrate. Under MiFID, transferable securities remain such regardless of whether they are represented in paper form, electronic registry or tokenised architecture. MiCA, by contrast, conditions inclusion in its scope on a specific technical architecture. An asset becomes a crypto-asset not through its economic function, but through the manner in which it is encoded and transmitted.
The doctrinal consequence is a shift in the ontology of regulated assets. Whereas financial law traditionally begins with rights, obligations and economic purpose, MiCA begins with infrastructure. It treats DLT not as a neutral medium for representation, but as the defining element of regulatory identity. This technological dependency introduces a conceptual rigidity that contradicts the EU’s declared ambition to remain flexible and future-proof.
II. The Limits of Technological Neutrality in a Regulation Tied to Architecture
Technological neutrality is premised on the idea that regulation should govern outcomes rather than tools. Yet MiCA ties its scope to a specific category of tools, thereby limiting neutrality from the outset. The regulation is not concerned with digital assets as such; it is concerned with digital assets on blockchains.
This design produces several limitations. It excludes assets that replicate the same economic behaviours as crypto-assets but rely on alternative architectures, such as centralised ledgers, hybrid databases or advanced cryptographic registries not structured as blockchains. If a non-DLT infrastructure were to support decentralised issuance, peer-to-peer transfer or programmable rights, such assets might escape MiCA’s regulatory perimeter despite posing comparable risks.
Simultaneously, MiCA captures tokens that may not create significant financial or consumer risk simply because they exist on a DLT. A purely decorative NFT with negligible economic impact is, from a technological perspective, a crypto-asset. MiCA introduces exemptions, such as the exclusion of unique NFTs, but these carve-outs only highlight the inadequacy of technology as a primary regulatory filter.
The result is a regulatory perimeter that is shaped more by the architecture of representation than by the functional behaviour of assets. This undermines the neutrality principle and risks creating distortions in innovation pathways.
III. Historical and Political Origins of the DLT Dependency
Understanding MiCA’s lack of neutrality requires examining the political and institutional context in which the regulation emerged. The EU conceived MiCA not as a general digital asset regulation, but as a response to the rise of blockchain-based markets and the associated risks highlighted by supervisory authorities. The political shock created by the Libra/Diem stablecoin initiative further reinforced the perception that DLT-based assets needed urgent regulatory attention.
In this environment, the EU conflated the risks of crypto-assets with the technology through which they were expressed. Blockchain became both the symbol and the substance of the regulatory problem. The decision to frame crypto-assets through their reliance on DLT was therefore not merely technical; it was political. It reflected a willingness to transform blockchain from an unregulated technological frontier into a domain of supervised financial innovation.
This explains why MiCA did not adopt a technology-agnostic definition such as “digital transferable value instruments,” which would have aligned more closely with technological neutrality. Instead, it anchored the definition in the specific technology that legislators sought to regulate.
IV. Regulatory Consequences: Over-Inclusion, Under-Inclusion and Boundary Instability
Anchoring MiCA in DLT creates several structural vulnerabilities. The first is over-inclusion: assets that pose limited economic or financial risks become subject to a regulatory framework simply because they live on a blockchain. This risks imposing administrative burdens on small issuers, developers and digital creators whose activities resemble software publishing more than financial intermediation.
The second vulnerability is under-inclusion. Assets that functionally resemble crypto-assets but rely on non-DLT architectures fall outside MiCA’s scope. Should innovation shift toward new forms of distributed databases or cryptographically secure registries, the regulation would no longer capture the phenomena it aims to supervise. MiCA’s architecture is therefore not future-proof; it is tied to a technological paradigm whose dominance is assumed rather than guaranteed.
A third vulnerability concerns boundary instability. As soon as financial instruments become tokenised, they fall under MiFID, regardless of technological form. As soon as non-financial instruments become represented on DLT, they potentially fall under MiCA. This produces a fragmented regulatory environment where classification depends not only on function but on architecture, increasing interpretive uncertainty and creating potential for regulatory arbitrage.
The interplay between MiCA and MiFID thereby becomes more fragile. A tokenised instrument may belong to MiFID because of its economic nature, yet belong to MiCA because of its technological form. The EU attempts to resolve this through negative scope provisions, but the reliance on technology continues to generate borderline situations requiring interpretive intervention.
V. The Doctrinal Cost of Architecture-Based Classification
The consequences of tying regulatory scope to technological architecture are not merely practical; they are doctrinal. European financial law traditionally treats representation technology as incidental. Anchoring a regulatory category in DLT represents a departure from centuries of legal thought, where rights and obligations, not encoding mechanisms, defined the essence of an asset.
By conditioning the identity of a crypto-asset on its technological medium, MiCA reverses this hierarchy. Technology becomes the decisive element, and legal substance becomes secondary. This inversion risks weakening the coherence of European financial law and undermining its conceptual unity.
Furthermore, MiCA’s technological anchoring introduces interpretive complexity when tokens incorporate multiple technological layers, off-chain components or hybrid systems. The regulation struggles to accommodate assets whose existence spans both DLT and non-DLT infrastructures, thereby requiring supervisory authorities to make conceptual determinations that go far beyond the text.
Conclusion
MiCA’s reliance on distributed ledger technology as a defining criterion reveals that the regulation is not technologically neutral. Despite the EU’s rhetoric, the regulation embeds a strong technology-specific approach that shapes its scope, logic and interpretive framework. This lack of neutrality creates structural distortions: it over-includes technologically defined assets regardless of economic substance, under-includes economically equivalent assets that rely on alternative architectures, and destabilises the boundary between MiCA and MiFID.
The doctrinal cost of this design choice is significant. MiCA departs from the European legal tradition of substance-based classification and replaces it with an architecture-based taxonomy that struggles to accommodate innovation, hybrid assets and future technological evolution. For the EU to remain genuinely technology-neutral, future regulatory revisions may need to move away from DLT as a constitutive criterion and instead adopt a functional approach grounded in economic purpose and risk profile.
Key takeaway. By encoding DLT into the legal definition of a crypto-asset, MiCA quietly abandons full technological neutrality: risks are filtered through architecture, not only function, leaving the regime both over- and under-inclusive as digital finance moves beyond today’s blockchain paradigms.