Europe's crypto industry is undergoing a major regulatory overhaul as the European Union's Markets in Crypto-Assets Regulation (MiCA) takes full effect, ending temporary arrangements that allowed firms to operate under national registrations.
Companies that have not secured MiCA authorization by July 1 must stop serving customers in the European Union or wind down operations. The rules create a single framework governing exchanges, brokers and digital wallet providers across all 27 member states, replacing the patchwork of national regulations that previously existed.
By May, only around 210 companies had obtained full authorization out of more than 1,200 crypto firms that held registratwaions under national regimes, according to data from the European Securities and Markets Authority (ESMA). Euronews reported that the low conversion rate has left much of the industry facing a regulatory deadline.
MiCA, which entered into force in stages beginning in late 2024, imposes requirements covering capital reserves, governance, anti-money laundering procedures and customer asset protections. Firms licensed in one member state can use a "passport" system to operate across the entire European Union.
Yamal Kalaf, co-founder of MiCAR Whitepapers Europe, told Euronews that the framework effectively creates a genuine single market in place of the previous system of 27 separate regulatory regimes. Roshan Dharia, chief executive of distressed-investment firm Echo Base, said many companies have concluded that obtaining and maintaining a MiCA license is not economically viable under their current business models.
National regulators have warned that firms continuing to operate without authorization could face enforcement measures. France's financial markets authority has cautioned that companies operating without licenses may also face criminal prosecution. ESMA instructed firms lacking authorization to prepare orderly wind-downs and notify customers about transferring assets to licensed platforms or self-custody wallets, according to Reuters.
Several major players have already secured authorization. Coinbase obtained approval in Ireland, while Kraken received licenses in both Ireland and Luxembourg. Revolut was granted authorization by Cyprus regulators, allowing it to provide crypto services throughout the European Union.
Binance, the world's largest cryptocurrency exchange, has encountered difficulties in obtaining a MiCA license. Reuters reported Tuesday that the company's application to Greece's Hellenic Capital Market Commission faced rejection, which would leave Binance without authorization to operate across the bloc. Binance later announced that it had withdrawn its Greek application but reiterated that Europe remained a key market and said it intended to continue pursuing approval.
Industry analysts expect smaller crypto companies and applications to increasingly rely on licensed custody providers instead of maintaining their own infrastructure. Floortje Nagelkerke, a partner at law firm Norton Rose Fulbright, told Euronews that client transfers and consolidation are already taking place as some companies fail to meet the new requirements.
