Regulations and Taxes Requirements as the Main Culprits
The ideas behind Bitcoin and cryptocurrencies are financial freedom and 24-hour liquidity, and crypto cards and bitcoin payments should serve as a bridge between digital assets and everyday spending. However, in the European Union, these cards frequently fail, while bitcoin payments have been entirely disabled.
All this is not due to technical shortcomings, but rather because of the complex regulations and tax requirements in the European Union. The issue is that these regulatory demands and impractical tax policies amount to a systematic blockade attempting to squeeze modern technology into outdated frameworks — and to maintain control over every individual’s payments.
Regulatory Barriers in the EU: MiCA and Its Consequences
With the introduction of MiCA (Markets in Crypto-Assets) in 2024/2025, the European Union sought to regulate the crypto market to protect consumers and prevent money laundering. In practice, however, the regulation appears not to achieve its stated goals.
MiCA requires crypto service providers, including crypto card issuers and bitcoin payment providers operating via the Lightning Network, to comply with strict AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements. In practice, this means users must submit personal identification before using a card or making Bitcoin payments. While this theoretically increases security, it also slows down the process or may even prevent it altogether, and reduces the partial (though not complete) anonymity.
The problem is that every user is treated as someone who may break the law, launder money, or finance terrorism — and is only “cleared of suspicion” after navigating all regulatory hurdles and submitting personal data with every transaction.
An even greater obstacle is the Travel Rule, which requires recording sender and recipient data for every Bitcoin or cryptocurrency transfer, regardless of the transaction amount. Travel Rule complicates automatic conversion of Bitcoin into Euro at the point of sale, as each transaction must be traceable and tax-documented.
In practice, this means that crypto cards or direct Bitcoin payments do not allow direct crypto spending. Instead, they require a “manual” sale of Bitcoin into fiat currency for each purchase. An example from Austria shows transactions being rejected with the message: “Crypto spending is restricted due to your tax identity.”
In Slovenia, for example, due to unrealistic regulatory obstacles, after years of operation and more than 2,500 payment points where Bitcoin could be used via the Lightning Network, by 2026, no payment locations remain.
Similar barriers exist across the EU, where EU-wide rules override national flexibility and undermine the idea of the European Single Market, which ensures the free movement of goods, services, capital, and persons within the EU.
Under the guise of protection, the European Union is stifling innovation and undermining the ideas on which the EU is based. For example, the European Single Market should facilitate trade, stimulate economic growth, and enhance competitiveness. Under MiCA, the EU is currently in a weaker position than the USA, Latin America, or Asia, and has probably already lost the competition.
Solutions and the Way Forward
Despite the obstacles, some solutions exist. For crypto card users, there is always the option to manually convert cryptocurrencies to fiat before card use. Conversion to fiat is a short-term solution, but in the long term, we should strive for seamless technical solutions that do not require multiple steps for users. Consequently, regulatory change is necessary.
The EU should adapt its regulations to embrace the liquidity of bitcoin and cryptocurrencies without unnecessary barriers.
Until European policymakers accept the new reality, crypto cards will remain more promise than reality, and bitcoin payments will remain utopian. Users will continue navigating regulations that create more obstacles than assistance, and will seek alternative solutions that benefit neither side.
It is time for a change. Bitcoin and cryptocurrencies are here to stay — and they deserve a modern regulatory framework.
Authors: Toni Čepon and Tanja Bivic Plankar
