The European Securities and Markets Authority (ESMA) has made it abundantly clear that unauthorized crypto-asset service providers (CASPs) within the European Union have to shut down operations immediately. Otherwise, they will face very harsh fines (up to 5% of their turnover).
The Markets in Crypto-Assets (MiCA) regulation’s 18-month transitional period is officially expiring on July 1. Unauthorized firms should have a "wind-down" plan in place.
The EU’s top financial markets regulator will fix the rather fragmented national regulation frameworks that have negatively affected the growth of the sector.
Out of more than 1,200 firms previously operating under various national regimes, an estimated 75% to 83% remain unlicensed (which is a rather staggering number).
No choice
ESMA has made it explicitly clear that unauthorized companies cannot simply disappear or attempt to operate quietly.
These firms are required to implement strict wind-down plans to ensure their customers do not lose money. They are no longer allowed to accept European users. They also have to halt all advertising campaigns across the entire region.
Clients should receive clear updates on the upcoming deadlines as well as instructions on how to move funds in a safe manner.
Exiting companies are not exempt from security regulations either. They must run strict anti-money laundering checks and screen all outgoing transactions.
The July 1 deadline is important for retail investors, given that users' funds that are kept by illicit companies will no longer be protected by European laws.
Customers have to check the ESMA Interim MiCA Register if they want to find out whether the provider is authorized or unauthorized.
Dan Burgin
U.Today Editorial Team
