EU Crypto Regime: The End Of The Transitional Period Is Near!

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The European Securities and Markets Authority has issued a stark warning to unauthorized crypto-asset service providers as MiCA's transitional period concludes on July 1, 2026.

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On June 23, 2026, the European Securities and Markets Authority (ESMA) issued a public statement on the transitional period set out in the Markets in Crypto-Assets Regulation (MiCA), which ends on July 1, 2026.

ESMA's statement sends an unambiguous message to firms still operating without authorization: wind down, and do so in an orderly manner that safeguards clients' interests.

Background

MiCA includes a transitional regime for crypto- asset service providers (CASPs) that offered their services in accordance with applicable law prior to December 30, 2024. The transitional period ends across the EU on July 1, 2026. ESMA's statement builds on its earlier statement of April 17, 2026, on the end of the transitional period under MiCA.

Expectations of unauthorized CASPs

ESMA expects unauthorized CASPs, including significant providers currently servicing EU clients under national regimes, to act immediately. CASPs who have not received an authorization must stop onboarding new EU clients, cease all marketing and solicitation, and limit services to those strictly necessary to sell, transfer, or close existing positions. Furthermore, unauthorized CASPs may continue providing custody services only for the period needed to complete an orderly exit.

Communicating with clients

Clients must be told “clearly, promptly and repeatedly” the timeline for closing out existing positions, including a deadline after which residual positions will close automatically. ESMA further reminds CASPs that they will need to continue applying AML/CFT controls throughout the wind-down period.

Non-EU CASPs

ESMA has also taken the opportunity to reiterate that non-EU CASPs cannot provide MiCA services to, or solicit, EU clients and this prohibition is applicable in both a retail and a business-to-business context.

Reverse solicitation—a narrow concept not a strategy

Firms hoping to rely on reverse solicitation should carefully assess their position.

The carve out is available only where a service is provided at the client’s own exclusive initiative, and ESMA’s previously issued guidelines interpret this very narrowly. Reverse solicitation is therefore unlikely to be a viable business strategy as it cannot be used to onboard clients at scale or sustain an existing client book. CASPs treating it as a route to continue EU-facing activity are almost certain to come under intensive scrutiny from national competent authorities (NCAs) across the EU and face the prospect of co-ordinated enforcement action.

How Winston Taylor can help

If your firm is exposed, we can move quickly. Our Digital Assets, Fintech Regulatory and Contentious Regulatory Teams have experience advising on:

orderly wind-down planning and client communications
assessment of authorization versus exit
disposals of existing books of business
reverse solicitation risk analysis
engagement with NCAs across key EU jurisdictions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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