ESMA Orders Unauthorized Crypto Firms to Wind Down as MiCA Deadline Approaches
The European Securities and Markets Authority (ESMA) has instructed unauthorized crypto asset service providers (CASPs) to begin winding down their EU operations as the transitional period under the Markets in Crypto-Assets Regulation (MiCA) ends on July 1, 2026. The guidance, issued on June 23, targets firms that continue serving EU clients without obtaining MiCA authorization.
ESMA expects these firms to take immediate steps to exit the market in an orderly manner while protecting client assets and reducing risks to market integrity. Unauthorized providers must stop onboarding new EU clients, opening new accounts, marketing services, and soliciting customers. They may only perform activities necessary for clients to sell or transfer crypto assets, reallocate holdings, or close positions.
Custody services are permitted only for the period strictly required to complete an orderly exit. Providers must communicate wind-down plans clearly and repeatedly to retail and institutional clients, including details on asset protection, transfer options, and deadlines for automatic position closures.
Wind-down plans must comply with EU and national conduct rules, anti-money laundering, and counter-terrorism financing requirements. Client due diligence, transaction monitoring, sanctions screening, and record-keeping must be maintained throughout the process. If accounts move to a MiCA-authorized provider, the receiving firm must complete its own onboarding and checks.
Firms established outside the EU are reminded that they cannot provide MiCA services or solicit EU clients except under the narrow reverse solicitation exemption. ESMA urges crypto users to verify whether their provider appears in the ESMA Register. If not, clients should transfer assets to an authorized CASP or a self-hosted wallet.
Coordination between ESMA, national authorities, the European Banking Authority, and the Anti-Money Laundering Authority is underway. Regulators may take coordinated enforcement action against unauthorized providers continuing operations after July 1.