EU Tightens Licensing for Crypto Exchanges and Wallet Providers under MiCA
What’s Happening
With the Markets in Crypto-Assets Regulation (MiCA) coming into force, the European Union has entered a new phase of crypto oversight. From now on, crypto exchanges, wallet providers, and other digital asset services must hold a license from one EU or EEA member state in order to operate legally.
Major players such as Coinbase, Kraken, Bybit, Crypto.com, and Bitget have already secured MiCA or VASP licenses, granting them the right to serve users across all 27 EU countries without applying for separate permits in each jurisdiction.
What Changes for Wallets and Users
- Wallet providers must segregate client funds, ensuring transparent reporting and asset protection. Violations may result in heavy fines.
- KYC/AML standards are becoming stricter: wallet services must identify customers and monitor the origin of funds.
- Providers are required to maintain transparency, disclosing leadership details, technological risks, and compliance measures.
Challenges and Risks
- Regulators are applying MiCA differently across member states, raising concerns about “regulatory arbitrage” where licenses are obtained in jurisdictions with looser oversight.
- Compliance costs may rise significantly for smaller crypto firms struggling to meet security and operational requirements.
- Unified licensing frameworks are expected to boost investor confidence and user adoption.
- Companies that adapt early will gain a competitive edge in the European market.
- The EU may push for stricter centralized supervision, especially on passporting licenses across jurisdictions.
