EU's MiCA Exodus Begins: Compliance Teams Brace for the Great Crypto Stampede 🏃‍♂️

The European Union's 18-month Markets in Crypto-Assets Regulation (MiCA) transitional period ended on July 1, putting anti-money laundering compliance at virtual asset service providers under fresh strain as users move between platforms, according to Bruna Szego, chair of the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA). Speaking during a Wednesday briefing with the European Parliament's Committee on Economic and Monetary Affairs, Szego said firms winding down their EU operations could come under pressure as customers rush to withdraw, while licensed crypto companies could face onboarding challenges as they absorb new users. "Because we know customers will rush to withdraw, this will put additional pressure on these VASPs," Szego said.

The European Securities and Markets Authority has said crypto service providers that remain unauthorized by the deadline must take "immediate" steps to wind down their EU activities. Under MiCA, crypto asset service providers (CASPs) must hold licenses to continue serving EU customers. AMLA published an advisory note ahead of the July 1 deadline warning crypto firms about money laundering risks arising from the end of the transitional period, outlining measures for firms winding down their EU operations and licensed providers onboarding new customers to maintain anti-money laundering controls during the transition. Szego urged service providers to maintain efficient compliance procedures throughout the move.

Looking ahead, Szego said AMLA will publish a report before the end of the year on money laundering risks in the crypto sector and supervisory practices across the bloc, assessing how national authorities supervise crypto-asset service providers and identifying differences in supervisory practices across member states. She added that the authority is also expanding its blockchain analytics capabilities to strengthen oversight of crypto-asset service providers. AMLA intends to use the report's findings to coordinate follow-up work with national regulators where needed as it works toward more consistent anti-money laundering oversight across the bloc, according to Szego.