European watchdogs warn that scammers are impersonating crypto firms and regulators after the July 1 MiCA deadline. Only 323 firms have licenses; over 1,700 must shut down.
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European financial regulators are warning that scammers are exploiting the transition to the European Union's new crypto licensing rules. The fraudsters impersonate crypto firms and regulators to steal funds, the Financial Times reported Thursday.
Since a July 1 deadline requiring all crypto companies to be licensed under the Markets in Crypto-Assets Regulation, or MiCA, hundreds of firms have been forced to shut down or sell their operations. Only 323 have secured licenses, according to the European Securities and Markets Authority. Data provider VASPnet estimated in July that more than 1,700 unlicensed companies would need to end their activities.
The disruption gives scammers an opening, said Stéphane Pontoizeau, executive director at the market intermediaries and market infrastructure supervision directorate of the Autorité des Marchés Financiers, the French regulator. "This moment is an opportunity for scammers more than usual," he said.
ESMA said it was aware of fraudulent practices involving the misuse of its logo and identity, including through forged documents, to promote scams.
High-profile exchanges like Coinbase and Kraken have obtained MiCA licenses, the FT reported. Binance, the world's largest crypto platform, has not been licensed.
Crypto scam losses rose to $17 billion globally last year, up from $6 billion five years earlier, according to Chainalysis data cited by the FT. Impersonation fraud is one of the fastest-growing varieties of crypto scams, Chainalysis has said.
The regulation was designed to provide clarity and encourage innovation, PYMNTS reported earlier this summer. A PYMNTS Intelligence and Citi report found that blockchain's next leap will be guided by regulation and that MiCA initially gave Europe a significant lead over other major markets.
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