MiCA deadline: Why crypto companies are leaving Europe

License or exit the market

The MiCA transition period will end on July 1, 2026. The European Securities and Markets Authority (ESMA) has directly warned that companies that continue to provide crypto services without authorization will breach EU law and will have to stop operating.

MiCA was designed as a single set of rules for the entire European crypto market. If a company obtains a license in one EU country, it can use the passporting mechanism to operate in all 27 member states. On paper, this was supposed to make life easier for crypto businesses: one license, unified requirements, and access to a large market.

But the market has approached the deadline with a wide gap between the old and new systems. While Europe had more than 3,000 virtual asset service providers in 2024, only 194 companies had received MiCA authorization by May 2026.

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Hogan Lovells expects that around 75% of providers that operated before MiCA will lose their registration status after the transition periods expire. Meanwhile, regulators are requiring unlicensed companies to prepare orderly wind-down plans.

Brussels questions its own rules

As companies prepare for the MiCA deadline, the European Commission has launched consultations on whether the regulation remains suitable for the digital asset market. The discussion opened on May 20, and feedback from individuals, companies, financial institutions, regulators, and industry associations will be accepted until August 31.

The review covers the main parts of MiCA: rules for crypto-asset issuers, tokens linked to assets, e-money tokens, and crypto service providers. The European Commission explains this by saying that the digital asset market continues to evolve and the global regulatory landscape has already changed.

At the same time, Europe is facing competition from other jurisdictions. The U.S. and Asian countries are also advancing new rules for the crypto market, turning regulation into a practical choice for companies: where it is faster to get approval, where the regulatory burden is lower, and where it is easier to work with global clients.

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Coinbase has pointed to the same issue. Katie Harries, the company’s head of policy for Europe, said MiCA has already set an early global standard, but now needs targeted improvements. According to her, Europe must not only preserve user protection but also remain competitive, because other jurisdictions are quickly moving forward with clear rules for the crypto market.

Stablecoins exposed MiCA’s weak spot

MiCA’s problems are especially visible in the stablecoin market. A report by Blockchain for Europe says European rules made euro-pegged tokens safer, but at the same time weakened their competitiveness. Euro stablecoins now account for less than 1% of the global market, even though the euro plays a much larger role in the global financial system.

The report describes this segment as “safe but structurally uncompetitive.” The reason lies in MiCA’s own requirements: issuers cannot pay users rewards for holding stablecoins, at least 30% of reserves must be held in bank deposits, and for large players this share can reach 60%. In a high-rate environment, this makes euro stablecoins less attractive than bank deposits and dollar tokens that can integrate yield through DeFi tools.

Major players are already reacting to these rules. In May 2025, Tether CEO Paolo Ardoino said the company would not apply for MiCA compliance for USDT and called the European requirements “very dangerous for stablecoins.”

Safety without leadership

MiCA has not failed as an idea: common rules are indeed necessary for a market that had operated for years under different national regimes and in gray areas. But the current version of the regulation shows the other side of this approach: some companies are unable or unwilling to go through licensing, users may face restricted access to services, and certain segments such as stablecoins are losing competitiveness.

For Europe, this is becoming a test not only of regulatory strictness but also of its ability to keep the industry. If the rules remain too expensive, slow, and inflexible, crypto companies will choose jurisdictions where it is easier to launch products, attract liquidity, and serve global clients. In that case, MiCA may create not a crypto market hub, but a safe yet significantly smaller European segment.

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