The European Union’s crypto industry has entered a new implementation phase following the end of the transition period under the Market in Crypto Assets (MiCA) Regulation.
The end of the transition means that crypto companies that are not authorized by MiCA will no longer be able to legally serve customers in the EU and are expected to wind down their operations or face multi-million euro fines and other enforcement measures.
Industry executives and lawyers told Cointelegraph that the next challenge is to ensure that national regulators can consistently apply the bloc’s single rulebook, even though supervisory approaches are expected to differ across member states.
The move marks MiCA’s first major enforcement test as regulators begin applying the EU’s crypto rulebook.
MiCA Compliance Costs and Fines Comparison
Compliance with MiCA can cost hundreds of thousands or even millions of euros, but experts say operating without a permit carries far greater financial and regulatory risks.
Nicola Masella, partner at Storm Partners, estimates the cost of implementing MiCA for many crypto companies at between €350,000 ($400,000) and €600,000 ($690,000), while Bricken CEO Edwin Mata said costs could reach €2 million ($2.3 million) depending on the company’s size, services and compliance readiness.
Regarding fines, Amina EU Managing Director Ekkehard Stolz said MiCA fines start at 5 million euros or 5% of annual turnover for some violations.
Source: EBA
Masella added that the European Banking Authority (EBA) on June 26 proposed increasing penalties under certain regulatory regimes, including imposing fines of as much as 12.5% of annual turnover for some stablecoin-related violations.
Who enforces MiCA?
Although MiCA creates a single EU rulebook, day-to-day oversight is handled by National Competent Authorities (NCAs), which authorize, supervise and enforce rules for cryptocurrency companies.
The European Securities and Markets Authority (ESMA) coordinates supervision across member states and maintains a public register of licensed crypto asset service providers, while the EBA directly supervises major stablecoin issuers.
Source: ESMA
“At the EU level, ESMA plays an important coordination and supervisory convergence role, especially to avoid regulatory arbitrage between member states,” Ivo Grlica, founder of GrlicaLaw and G Lab Advisors, told Cointelegraph.
“While national regulators are only the first line of enforcement for MiCA, the legal repercussions can spread to national courts and criminal justice systems if the underlying conduct causes harm,” he added.
Enforcement is unlikely to be uniform initially
MiCA enforcement is unlikely to be uniform in the early stages, as NCAs differ in resources, experience, and supervisory priorities.
“ESMA has made clear that it expects NCAs to act against unauthorized providers from 1 July,” Stolz said, adding that how aggressively each regulator acts “will depend on local resources and priorities.”
Peter Bidewell, vice president of institutional product implementation at Parfin, said that despite MiCA’s goal of harmonizing crypto rules across the EU, differences in supervisory approaches could create opportunities for regulatory arbitrage.
Related: StanChart participates in first ESMA MiCA register update after deadline
Mr. Grillica said he expected enforcement to become more systematic over time as regulators identify fraudulent providers and share information between member states, making it increasingly difficult for companies with a history of violations to later obtain MiCA authorization.
Several EU regulators, including authorities in the Czech Republic, Bulgaria, Luxembourg and Italy, have issued notices reminding crypto companies that the MiCA transition period has ended and urging unlicensed providers to scale back their operations.
The Czech National Bank told Cointelegraph that the country’s Financial Market Digitalization Law gives it the power to impose sanctions for MiCA-related violations, including unauthorized operations, illegal token offerings, and failure to cooperate with supervisory authorities. The law allows the central bank to fine companies that provide cryptocurrency services without a license up to CZK 118.5 million (approximately $5.6 million), or in other cases, the greater of 5% of annual turnover or twice the illegal profits obtained.
Cointelegraph contacted France’s Authority for the Financial Markets (AMF), the Netherlands’ Financial Markets Authority (AFM), and Germany’s Federal Financial Supervisory Authority (BaFin) to ask how they intend to implement MiCA after the transition deadline. No one responded publicly.
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