ESMA Requires Unlicensed Crypto‑Asset Service Providers to Withdraw from the EU Ahead of MiCA Expiry

Europe’s market regulator has instructed unlicensed crypto‑asset service providers to immediately cease operations within the European Union.

The European Securities and Markets Authority (ESMA) issued the directive as the Markets in Crypto‑Assets Regulation (MiCA) transitional period expires on 1 July 2026.

MiCA is the EU’s flagship crypto‑regulatory framework, demanding that any firm offering crypto services to EU clients obtain formal authorization. The transition period allowed existing providers to continue operating under national regimes while they sought approval. That window closes on July 1.

Some firms secured authorization before the deadline; others did not. ESMA’s statement targets the latter group.

According to the ESMA release, unauthorised firms face a clear set of obligations. They must stop acquiring new EU clients, discontinue marketing and solicitation to EU residents, and refrain from opening new accounts.

Existing services must be narrowed in scope. Firms may continue operating only to the extent necessary to assist clients in selling assets, transferring holdings, closing positions, or exiting the platform.

Custody of client assets is permitted only for the duration required to complete a orderly exit. Firms must also communicate with clients, ensuring that messages are clear, timely, and repeated.

Clients should be informed of the wind‑down timeline, the protections in place, and the fate of residual positions if no action is taken. An automatic position‑closure deadline must also be provided.

AML Requirements Persist During Wind‑Down

ESMA emphasized that compliance obligations do not pause during a wind‑down. Firms must maintain anti‑money laundering and counter‑terrorism financing controls throughout the exit process, including customer due diligence, transaction monitoring, sanctions screening, suspicious transaction reporting, and record‑keeping.

When a client transfers to a MiCA‑authorised provider, the receiving firm must perform full onboarding checks. Authorization does not carry over from the former provider.

ESMA extended the warning to firms based outside the European Union. Non‑EU crypto‑asset service providers cannot offer MiCA‑covered services to EU clients, including in business‑to‑business arrangements.

The regulator also noted that MiCA prohibits firms from outsourcing custody services to entities lacking CASP authorization under the regulation.

ESMA issued a direct warning to retail users. Clients of unauthorised providers do not benefit from MiCA’s investor protection rules, and there is no guarantee of asset safeguarding under the framework if the provider is not licensed.

EU clients were advised to verify their provider’s authorization status by consulting the ESMA Register, a public database of licensed CASPs.

The July 1 deadline marks the end of a multi‑year transition toward a unified EU crypto rulebook.

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