Only 281 of 1,343 crypto firms secured MiCA authorization by July 1. Unauthorized providers sent $5B to sanctioned entities, three times the rate of licensed firms.
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The European Union’s new crypto licensing regime has left more than 1,000 firms without authorization, according to blockchain intelligence firm TRM Labs.
Only 281 of 1,343 crypto-asset service providers operating across the European Economic Area had secured Markets in Crypto-Assets Regulation authorization by the July 1 cutoff. The remaining 1,062 must leave the market, restructure or transfer customers to an authorized provider, TRM said.
The gap extends beyond licensing. TRM found that 12% of unauthorized firms carry a High or Severe risk rating, compared with 2% of authorized providers. Every firm assigned a Severe rating belonged to the unauthorized group.
A small number of unauthorized firms sent between 1% and 12% of their volume directly to illicit addresses. No authorized provider recorded direct illicit exposure above 1%.
National registers vs. MiCA approvals
Before MiCA, crypto companies operated under separate registration systems maintained by individual European countries. TRM identified 383 operating firms under Lithuania’s previous system and 241 in Poland. Poland’s official register contained more than 1,800 entries, though most showed no observable crypto activity.
Germany authorized 55 firms under MiCA. France and the Netherlands each authorized 29. Malta approved 20 and Cyprus 19. Italy issued nine home authorizations despite 145 firms operating there.
Lithuania produced a different conversion rate. Eight firms obtained authorization from a previous register containing more than 400 providers. Poland issued none despite its old register exceeding 1,800 entries. Greece and Portugal also issued no home authorizations in TRM’s dataset.
Passporting and concentration
Under MiCA, a CASP approved in one member state can use passporting rights to serve customers across the bloc. B2C2 secured Luxembourg authorization in May, allowing the liquidity provider to offer regulated over-the-counter spot crypto trading across all 27 EU states and three additional EEA markets. Coinbase, Bitpanda and Kraken have used the same system to operate from different regulatory bases.
By July 3, ESMA’s interim register had expanded to 300 authorized providers after 57 firms were added around the deadline, including Standard Chartered and FalconX.
Risk concentration among unauthorized firms
Direct exposure to illicit or high-risk counterparties was closer across each group as a whole. Unauthorized providers recorded 0.09% of outgoing volume directly involving such counterparties, compared with 0.07% among licensed firms.
High-risk exchanges and gambling services accounted for the largest exposures. Unauthorized firms sent $19 billion to high-risk exchanges and $15.3 billion to gambling services. Authorized providers recorded $14.2 billion and $13.4 billion, respectively.
Sanctions exposure produced a larger gap. Unauthorized firms sent $5 billion directly to sanctioned counterparties, roughly three times the $1.7 billion recorded among authorized firms, TRM calculated.
Risk within the unauthorized group was heavily concentrated. Half of the firms showed no measurable direct illicit exposure. A limited number sent between 1% and 12% of their volume directly to illicit addresses, pushing direct illicit exposure among offboarding firms about four times higher because of those outliers.
The unauthorized cohort included HTX, which TRM described as a designated exchange, and Huione Pay, which has been named under U.S. special measures. Entities affected by EU measures restricting dealings connected to Russia were also among firms that held national registrations but did not obtain MiCA authorization.
Exchange-heavy composition
Exchanges accounted for 42% of unauthorized providers compared with 29% of authorized firms. Payment companies represented 16% and 9%, respectively. Financial and investment service providers were more common among authorized CASPs, making up 25% and 21% of the group, compared with 9% and 7% among unauthorized firms. TRM’s High-Risk Exchange category appeared only among providers that did not obtain authorization.
AMLA oversight and wind-downs
The EU’s Anti-Money Laundering Authority said the end of the transition period would cause unauthorized virtual asset service providers to leave the market, customer relationships to be transferred or terminated, and crypto activity to become concentrated among fewer authorized CASPs.
Compressed exit schedules can pressure anti-money laundering controls and make it harder to track where customers and funds move, the authority said. Receiving CASPs can face changes in their customer risk profiles and additional demands on transaction monitoring systems.
AMLA has asked supervisors to prioritize oversight of exit plans and customer transfers while coordinating with regulators in other jurisdictions when customers move across borders.
TRM identified 30 unauthorized providers with High or Severe risk ratings, giving receiving firms and supervisors a group that can be screened before customer migrations take place. The firm cautioned against treating all customers leaving unauthorized providers as equally risky. Most firms that failed to secure authorization still carried Low risk ratings and recorded negligible direct illicit exposure.
For receiving CASPs, TRM said entity-level screening can distinguish customers arriving from a Low-rated payment provider with little illicit exposure from those leaving a Severe-rated entity where a measurable share of transaction volume has moved directly to illicit addresses.
No correlation between license count and risk
ESMA launched a review of a sample of MiCA-authorized crypto custodians in July, examining custody controls, private-key management, incident response and risks tied to third-party providers.
TRM separately examined whether regulators issuing more licenses were also supervising firms with higher illicit exposure. Across 23 jurisdictions where licensed providers carried measurable transaction volume, it found no identified correlation between the number of authorizations issued and the illicit exposure of firms supervised there.
For financial institutions assessing counterparties, TRM said the number of CASP licenses granted by a firm’s home jurisdiction provides little information about the individual provider’s risk. The differences sit at entity level, including individual risk ratings and direct exposure to illicit, sanctioned and other high-risk counterparties.
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