MiCA transition ends: What next for CASPs without licences?

With the transitional period under the Markets in Crypto-Assets Regulation (MiCA) having ended on 30 June 2026, crypto firms face a significant moment. A literal reading of the law suggests the choice is binary - either secure a licence or cease trading from 1 July 2026. However, as you would expect from an industry renowned for innovation, alternative approaches are emerging that could provide a potential route forward for firms that have yet to secure their licence.

Background

When MiCA entered into force in 2023 it included a transitional period for entities acting as a Virtual-Asset Service Provider (VASP) before December 2024, enabling them to move from compliance with existing local regulatory frameworks to compliance with MiCA.

Member States were given discretion to shorten the transitional period where their existing regulatory framework was considered sufficiently comparable to MiCA. However, the transitional period for all Member States concluded on 30 June 2026.

The impact of the move to MiCA compliance has been significant. Prior to MiCA, there were more than 1,000 Virtual Asset Service Providers (VASPs) registered under local Member State regimes. At present, only around 200 firms appear on the European Securities and Markets Authority (ESMA) register holding some form of MiCA Crypto Asset Service Provider (CASP) licence.

This appears to reflect a broader objective of the European Commission and National Competent Authorities (NCAs) to raise standards of governance, oversight and accountability, with the aim of protecting EU consumers and supporting confidence in financial and technology services across the bloc.

Impact

As the transitional period was not applied in a uniform way across the EU, VASPs have encountered challenges that are often beyond their control to transition to the new CASP regime

As is frequently the case with regulation implemented across a large trading bloc, practical issues have emerged. While many VASPs have welcomed the introduction of clearer regulation, a number have experienced difficulties securing MiCA CASP licences despite actively engaging with the process.

Solutions

Emerging solutions may provide a route forward for those VASPs who did not secure a MiCA licence by 30 June.

One possible route is partnering with a firm that already holds a MiCA CASP licence and leveraging that entity's regulatory permissions for the provision of digital asset services.

The success of such an arrangement will depend on establishing an appropriate contractual framework that does not expose either the licensed CASP or the former VASP to allegations of non-compliance with MiCA. While the customer journey may not be entirely seamless – for example, the CASP may need to undertake its own Know Your Customer (KYC) checks – this may represent a practical trade-off, enabling continued operations while a firm's own MiCA licence application progresses.

We are supporting clients as they navigate the transition to MiCA. If you would like to discuss the potential impact on your business, please get in touch.

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