MiCA costs could push licensed crypto firms out of EU, Gate CEO

Gate Europe chief executive Giovanni Cunti warned that some crypto firms licensed under the EU’s Markets in Crypto-Assets Regulation (MiCA) may leave the European market as compliance costs increase.

MiCA’s 18-month transition period ended on July 1, requiring firms that serve EU customers to obtain authorization or cease offering regulated services. The deadline led some platforms to restrict or withdraw services in parts of Europe; some large exchanges were not authorized before the cut-off.

Cunti said the tighter rules and higher operating costs are changing who can compete in Europe. “I think there are going to be quite a few more of the ones that acquire MiCA license that will not be capable to sustain the cost and the resources that are needed to carry on this business in the long term,” he warned.

He also cautioned that startups and new projects may choose to launch outside the EU. “We may need to be prepared that some projects, possibly some important projects, may be looking at other jurisdictions with different guidelines,” Cunti added, noting investor-protection rules can limit the speed of product development.

In a recent update, the European Securities and Markets Authority added 14 crypto-asset service providers to its register, bringing the total to 294 after an earlier update following the July 1 deadline. The number of authorized providers is growing but at a slower pace than before the transition.

Cunti described the post-deadline market as much smaller than previously. “There was a market with thousands of operators, and now there is a market with only hundreds,” he observed. He said that the reduced pool of operators could increase opportunities for firms that meet MiCA requirements, as some customers seek platforms that continue to provide access to crypto services.

Some firms have already limited operations in specific countries. Cunti’s remarks indicate that additional consolidation or relocation could occur if firms determine the regulatory costs and authorization requirements are unsustainable.