Published: February 2026
The European crypto market has entered a new phase — not regulation, but enforcement.
With the full application of the Markets in Crypto-Assets Regulation (MiCA) as of 1 January 2026, national authorities are no longer tolerating legacy crypto business models that relied on light-touch registration regimes, regulatory arbitrage, or high-risk transaction flows.
Lithuania, once Europe’s preferred crypto gateway jurisdiction, has become the first real testing ground for this shift.
The results are already visible — and disruptive.
From Registration Hub to Enforcement Zone
For years, Lithuania attracted hundreds of crypto asset service providers (VASPs) through a simple registration model with limited supervisory depth. That era is now definitively over.
Following the expiry of transitional arrangements on 31 December 2025, the Bank of Lithuania made its position explicit:
Any entity providing crypto-asset services without a MiCA-compliant CASP licence is considered to be engaging in illegal financial activity.
This includes:
- onboarding of new customers
- execution of crypto transactions
- custody or control of crypto assets
- payment processing involving crypto rails
There is no “soft landing”. Operations must either be licensed — or shut down.
Early Casualties: utPay and CoinsPaid (Dream Finance)
Two prominent crypto payment infrastructures illustrate the new reality.
UTRG UAB (utPay) suspended crypto services with effect from 1 January 2026, citing MiCA compliance requirements and the inability to continue operations under the new framework.
Shortly thereafter, Dream Finance UAB, the Lithuanian entity behind CoinsPaid and CryptoProcessing, also halted crypto-asset services in Lithuania.
Official communications framed the move as temporary. From a regulatory perspective, the implications are clear: without MiCA authorisation, continued operation is not legally viable.
These are not isolated compliance issues. They are structural failures to meet the new regulatory threshold.
Why Crypto Payment Gateways Are Hit First
MiCA’s impact is not evenly distributed. Crypto payment gateways — especially those servicing high-risk verticals such as offshore iGaming, unlicensed gambling, and grey-market merchants — face disproportionate pressure.
There are three reasons for this:
1. AML / CFT Exposure
Payment gateways sit at the intersection of fiat, crypto, and merchant activity. Where transaction flows involve high-risk jurisdictions or industries, regulatory tolerance is minimal.
2. Banking Dependency
Unlike pure software providers, payment gateways rely on correspondent banking, SEPA access, and PSP relationships.
Banks are now re-rating crypto exposure under MiCA — and withdrawing support from non-licensed structures.
3. Passporting Collapse
Without a MiCA CASP licence, EU-wide passporting rights disappear. A local suspension effectively becomes a single-market exclusion.
In short: gateways are systemic choke points — and regulators know it.
The Shrinking Field: Who Is Left?
Out of an estimated 170+ registered crypto entities once operating in Lithuania, only a small fraction applied for MiCA authorisation.
Fewer still are demonstrably positioned to receive approval.
At the time of writing, only a handful of Lithuanian-based entities appear clearly aligned with MiCA’s capital, governance, and compliance requirements — primarily subsidiaries of large, regulated financial groups.
This is not accidental. MiCA was designed to reduce the number of market participants, not accommodate them.
Who Is Likely Next?
Based on regulatory signals, the next wave of enforcement is likely to affect:
- crypto gateways with continued iGaming or offshore exposure
- VASPs still onboarding EU customers without MiCA licences
- entities attempting “technical service” rebranding to bypass CASP classification
- firms relying on legacy registrations or third-country structures without EU authorisation
Jurisdiction hopping will not solve the problem. Without MiCA authorisation, EU market access is structurally blocked.
What This Means for Banks, PSPs, and Partners
For financial institutions, MiCA fundamentally changes crypto risk assessment.
Exposure to unlicensed crypto service providers now carries:
- elevated regulatory risk
- potential AML/CFT liability
- reputational and supervisory consequences
As a result, banking exits and payment rail withdrawals are becoming the primary enforcement tool — faster and more effective than formal sanctions.
Conclusion: This Is Not a Transition — It’s a Reset
MiCA is not a gradual harmonisation exercise. It is a market reset.
The EU crypto ecosystem is moving toward:
- fewer participants
- higher capitalisation
- full regulatory visibility
- bank-compatible infrastructure
For businesses built on grey zones, the outcome is predictable.
For compliant, well-capitalised operators, MiCA is not a threat — it is a moat.
The guillotine has fallen once. It will fall again.
