Why EU-Licensed Crypto Payment Providers Are Becoming a Market Requirement

If your crypto payment provider is still operating under a transitional exemption, how much longer can you afford to wait?

MiCA, the EU’s Markets in Crypto-Assets Regulation (Regulation 2023/1114), became fully applicable on December 30, 2024. Every crypto-asset service provider (CASP) operating in the EU now needs proper authorization from a national competent authority. The regulation is no longer theoretical. It is the law.

And yet, a significant number of providers are still operating under transitional provisions. Article 143 of MiCA allowed member states to grant grandfathering periods of up to 18 months for existing providers. That means the final deadline lands on July 1, 2026. After that, any provider without a MiCA authorization simply cannot legally offer crypto-asset services in the EU.

For businesses that depend on these providers for payment processing, this creates a ticking clock. The question is no longer whether licensing matters. It is whether you have checked the licensing status of the provider handling your customers’ money.

The Regulatory Shift Is Already Happening

MiCA did not arrive without warning. The regulation was published in June 2023, with a phased rollout. Titles III and IV, covering asset-referenced tokens (ARTs) and e-money tokens (EMTs), became applicable on June 30, 2024. Title V, covering CASPs, followed on December 30, 2024.

The European Securities and Markets Authority (ESMA) made its position clear in a supervisory briefing published on January 31, 2025: “There are no low-risk CASPs.” Every provider, regardless of size, must undergo a thorough authorization assessment. No shortcuts, no rubber stamps.

On top of MiCA, the EU has been strengthening its anti-money laundering framework. The EU AML Regulation (2024/1624) and the updated Transfer of Funds Regulation (2023/1113) add further obligations around customer due diligence, transaction monitoring, and the “travel rule” for crypto transfers.

The direction is unmistakable. Europe is building a regulatory environment where crypto payment providers are held to the same standards as traditional financial institutions. Providers that cannot meet these standards are being pushed to the margins.

What MiCA Actually Requires from Payment Providers

MiCA is not a light-touch registration. It imposes real operational obligations on CASPs that directly affect how they serve business clients.

Governance and organizational requirements. Authorized CASPs must maintain sound governance arrangements, internal control mechanisms, and effective risk management procedures. Key personnel must pass fit-and-proper assessments. ESMA’s guidance specifically looks for technical crypto expertise, not just general management experience.

Prudential requirements. CASPs must hold minimum own funds, ranging from EUR 50,000 to EUR 150,000 depending on the services they provide. These requirements ensure that providers maintain a financial cushion against operational losses.

Consumer protection obligations. MiCA mandates clear, fair communication with clients. Providers must act honestly, fairly, and professionally in the best interests of their clients. Complaints handling procedures must be established and maintained.

Outsourcing and autonomy. A CASP cannot become a “letter-box entity” that outsources all critical functions to third parties. National competent authorities evaluate whether the provider has genuine operational substance in the EU, not just a registered address.

AML and compliance infrastructure. Under MiCA and the EU AML framework, providers must implement customer screening, transaction monitoring, suspicious activity reporting, and sanctions compliance. These are not optional enhancements. They are prerequisites for authorization.

For businesses evaluating a crypto payment provider, these requirements offer a practical filter. A MiCA-authorized provider has passed all of them. An unauthorized provider has passed none.

The Risk of Working with Unlicensed Providers

This is where things get uncomfortable for businesses that have not yet scrutinized their provider’s regulatory status.

Counterparty risk increases. An unlicensed provider is not subject to the capital requirements, governance standards, or supervisory oversight that MiCA imposes. If something goes wrong, there is no regulatory safety net. The $44.8 million hack that hit CoinsPaid in 2023 is a stark example. The incident led to questions about the company’s regulatory standing, and its Estonian registration was subsequently revoked.

Banking relationships become fragile. Banks and payment service providers operate under strict AML frameworks. When they identify that a business partner is processing payments through an unlicensed crypto provider, the typical response is enhanced due diligence followed by relationship termination. As one legal analysis put it: without the right authorization, a crypto business may become “effectively unbankable.”

Regulatory exposure spreads. If your payment provider faces enforcement action, the disruption cascades. Frozen funds, suspended services, delayed settlements. Your business did not break any rules, but your choice of provider created the exposure.

Enterprise contracts require it. Larger clients, institutional partners, and regulated entities increasingly include licensing requirements in their vendor due diligence. A provider without MiCA authorization is a compliance gap in their risk framework. That alone can cost you deals.

The transition period was meant to give existing providers time to get authorized. It was not meant to be a permanent exemption. Businesses that treat it as one are accumulating risk with every month that passes.

Why Payment Institution Licensing Matters on Top of MiCA

MiCA covers crypto-asset services. However, when a provider handles fiat currency, processes payments, or manages merchant settlements, a different regulatory layer comes into play: the Payment Institution (PI) license under the EU Payment Services Directive.

A PI license means the provider is supervised under the same framework as traditional payment processors. The requirements are significant:

• Higher capital requirements than a standard CASP authorization
• Safeguarding obligations for client funds, meaning customer money must be held separately from operational funds
• Conduct and governance rules aligned with established payment industry standards
• Passporting rights to offer services across all EU/EEA member states

Most crypto payment providers hold one license or the other. Very few hold both.

This distinction matters because crypto payment processing sits at the intersection of two worlds. The crypto side is covered by MiCA. The fiat side, including euro settlements, bank withdrawals, and merchant payouts, is covered by PSD. A provider that only has MiCA authorization may still face questions about its authority to handle the fiat leg of a transaction.

Dual licensing (MiCA + PI) closes that gap. It means the provider is authorized to handle both sides of the payment flow, from the moment a customer pays in Bitcoin to the moment euros arrive in the merchant’s bank account.

At CoinGate, we obtained both our MiCA license and Payment Institution license in 2025, making us one of the few crypto payment processors operating under both regulatory frameworks. We have been based in Vilnius, Lithuania since 2014, with over a decade of regulatory track record. That combination of dual licensing and operational history is not common in this space.

How to Verify a Provider’s Licensing Status

Trust, but verify. Here are practical steps to check whether your crypto payment provider is actually licensed.

1. Check the national regulator’s public register. Every EU member state maintains a public registry of authorized CASPs and payment institutions. In Lithuania, this is the Bank of Lithuania. In France, the AMF. These registers are searchable online.

2. Ask for the license number directly. A licensed provider should be able to give you their authorization number and the issuing authority without hesitation. If this information is hard to find or deliberately vague, treat that as a signal.

3. Verify the scope of the license. A CASP authorization does not automatically cover payment services, and vice versa. Ask specifically whether the provider holds both MiCA authorization and a PI license if they handle fiat settlements.

4. Check for passporting. If the provider is licensed in one EU member state but serves your business in another, confirm that they have passported their services to your jurisdiction. MiCA allows cross-border passporting, but it requires notification to the host member state’s NCA.

5. Review ESMA’s register. ESMA is building a centralized register of authorized CASPs across the EU. As this register matures, it will become the definitive source for verifying authorization status across member states.

6. Include licensing in your vendor due diligence. Do not treat this as a one-time check. Regulatory status can change. Annual reviews of your payment provider’s licensing and compliance standing should be part of your vendor management process.

The Market Is Moving Toward Licensed Providers

The shift is not just regulatory. It is commercial.

Banks are tightening their counterparty risk frameworks around crypto. ESMA has explicitly stated that “there are no low-risk CASPs,” which sets the tone for how banking partners evaluate their exposure to crypto businesses. A 2025 regulatory analysis found that banks increasingly classify unlicensed crypto operators as “high risk, unmanaged,” leading to enhanced due diligence, delayed onboarding, or outright rejection.

Enterprise clients are following the same logic. Compliance teams at larger businesses now routinely require proof of regulatory authorization before approving a crypto payment provider. This is especially true for companies in regulated industries like financial services, insurance, and healthcare.

Payment networks and card issuers are also raising the bar. As crypto payments become more integrated with traditional payment infrastructure, the expectation of equivalent regulatory standards increases.

For providers, licensing is becoming a competitive moat. Those who invested early in authorization are now positioned to serve the growing segment of compliance-conscious businesses. Those who delayed face not just regulatory risk, but market exclusion.

The gap will only widen. As the July 2026 transition deadline approaches, unlicensed providers will face a binary choice: get authorized or exit the EU market. Businesses that proactively select licensed providers now avoid the disruption of a forced switch later.

What This Means for Your Business

The era of “crypto is unregulated” is over in the EU. MiCA has created a clear framework, ESMA is enforcing it with a “no low-risk” stance, and the market is responding accordingly. Licensing is no longer a nice-to-have differentiator. It is a baseline requirement.

If you are evaluating crypto payment providers, or reassessing the one you already use, the licensing question should come first. Not after you have compared fees, integration options, and settlement speeds. Before all of that. Because if the provider cannot demonstrate proper EU authorization, nothing else matters.

We built CoinGate to operate at this intersection, fully licensed under both MiCA and PI frameworks, processing over 7 million payments since 2014, and supporting businesses across the EU with compliant crypto payment infrastructure.Thinking it might be time to work with a provider that has its licensing in order? Start with us.