Up to 75% of crypto firms operating under pre-MiCA registration regimes could lose their status when the European Union's Markets in Crypto-Assets (MiCA) transitional periods expire on July 1, 2026, according to an analysis published by international law firm Hogan Lovells.
The analysis noted that more than 3,000 virtual asset service providers (VASPs) previously operated across Europe under national registration frameworks, compared with 194 firms that had obtained authorization as Crypto-Asset Service Providers (CASPs) by May 2026. The gap highlights the scale of the transition facing the industry as regulators move toward full implementation of MiCA.
The July deadline marks one of the first major tests of the EU's crypto regulatory framework. Firms that fail to secure authorization may lose the ability to continue providing regulated services, potentially reshaping the competitive landscape of the European digital asset market.
According to Hogan Lovells, the new regime could accelerate market consolidation as larger firms are better positioned to absorb compliance costs and licensing requirements. Reduced access to regulated providers could also encourage some users to seek services from platforms operating outside the EU regulatory framework.
The final phase of the EU's Markets in Crypto-Assets framework will take effect on July 1, 2026, ending the transitional arrangements that allowed some crypto firms to continue operating under national registration regimes while seeking MiCA authorization.
The transitional period was introduced to give existing providers time to adapt to the bloc's new regulatory framework. Once it expires, crypto-asset service providers that have not secured authorization under MiCA will no longer be permitted to offer regulated services across the European Union.
In an April statement, the European Securities and Markets Authority (ESMA) reminded firms that the transition was temporary and urged companies that have not obtained authorization to prepare for an orderly withdrawal from the market if necessary. The regulator said wind-down plans should address client communications, asset transfers, and other measures designed to protect customers during the process.
The statement also outlined expectations for firms moving clients onto MiCA-compliant platforms. According to ESMA, providers should ensure that onboarding procedures, compliance checks, and customer protections meet the requirements established under the new regime.
ESMA urged firms that have not obtained authorization to prepare for the possibility of exiting the market once transitional arrangements end.
Hogan Lovells framed the licensing gap as a sign that MiCA is acting as a market filter, not only as a harmonized rulebook. The firm said the move from national registration systems to full CASP authorization has created a higher compliance threshold for crypto businesses across the bloc.
Before MiCA, many firms operated under lighter national regimes that differed from country to country. The new framework requires companies to meet common EU standards covering governance, capital requirements, client asset protection, anti-money laundering controls, and ongoing supervision.
Industry estimates cited by Hogan Lovells suggest Europe had more than 3,000 registered VASPs before MiCA, including more than 1,400 registrations in Poland alone. By comparison, only 194 CASPs had received authorization across the EU by May 2026.
That shift leaves smaller firms under pressure as the deadline approaches. Some may be unable to complete the authorization process in time, while others may decide that the cost of compliance is too high for their business model.
The firm argued that MiCA could create what it described as a "consumer protection paradox." While the regulation aims to improve investor safeguards, a shrinking pool of authorized providers may push some users toward offshore platforms and services operating outside the EU regulatory framework, where consumer protections may be weaker.
The report also warned that compliance costs could make it harder for smaller firms to compete. Hogan Lovells said larger firms are generally better positioned to absorb regulatory expenses, raising concerns that the new framework could reduce competition and limit innovation across the sector.
Italy's CONSOB has already begun taking direct enforcement action under MiCA, issuing orders to halt unauthorized crypto-asset services and imposing penalties linked to crypto offerings that failed to meet the regulation's disclosure requirements.
In France, the AMF has continued using public warnings and blacklists to target providers offering crypto services to French users without proper authorization, including firms operating from outside the country.
Austria's Financial Market Authority joined both regulators in a joint statement warning investors about unauthorized providers and calling for closer coordination between national supervisors as MiCA enters its enforcement phase.
The report said enforcement activity across the bloc has increasingly shifted from supervisory guidance toward direct action against firms operating without authorization, particularly as regulators prepare for the end of transitional arrangements.
The report also highlighted Malta's MFSA, which became the subject of an ESMA peer review in 2025. While the review acknowledged the regulator's expertise and cooperation, it raised concerns that some risks were not fully addressed during the authorization process, fueling wider debate over forum shopping and the consistent application of MiCA across the EU.
The law firm also pointed to growing discussion around whether major CASPs should eventually be supervised directly by ESMA rather than national regulators. The European Commission proposed expanding ESMA's supervisory role in late 2025, arguing that a more centralized approach could help ensure consistent enforcement across the EU's crypto market.
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