Europe Set to Crack Down on Hundreds of Unlicensed Crypto Firms

A small nation in the EU is about to implement one of the most stringent crypto crackdowns in Europe, warning that hundreds of unlicensed digital asset companies could face fines, website blocks, and potentially prison sentences starting next week.

Key Takeaways

The Bank of Lithuania has initiated a strict crackdown on unlicensed crypto firms, with potential fines, website blocks, or prison terms for non-compliance.
A significant portion of registered firms in Lithuania remain unlicensed as the December 31 deadline approaches.
Latvia is also striving to establish itself as a MiCA-compliant entity, enhancing the regional crypto ecosystem.
Major exchanges like KuCoin and Coinbase are actively seeking compliance with MiCA regulations as enforcement begins.

The central bank has made it clear that any platform that continues to onboard users or manage crypto without the required MiCA authorization after December 31 will be deemed illegal.

Lithuania Sets Strict Regulations for Crypto Beginning January 1

The Bank of Lithuania, responsible for overseeing the country’s cryptocurrency sector, has urged all service providers to secure necessary licenses immediately. While over 370 firms are officially registered in the country, only about 120 are actively operating and reporting revenues.

Alarmingly, less than 10%, or roughly 30 companies, have applied for MiCA licenses thus far, putting many active firms and hundreds of registered entities at risk of enforcement actions.

A transitional period, during which crypto exchanges, wallet operators, and other providers can obtain authorization, will end at the conclusion of 2025. After this deadline, Lietuvos Bankas has warned it will take stringent actions against non-compliant companies, including imposing fines, blocking websites, and pursuing criminal charges under national law. Offenders could face prison sentences of up to four years.

Dalia Juškevičienė, head of the Central Bank’s Investment Services and Undertakings Supervision Division, stressed the importance of orderly shutdowns for firms that do not plan to continue their operations.

“Participants in the crypto-asset services market that do not intend to continue their operations should not delay and should launch active communication campaigns to ensure their clients are well informed about the winding down,” reported local media, quoting Dalia.

Customers must receive clear guidance on how to transfer their fiat and digital assets to other custodians or self-hosted wallets before services are halted.

This crackdown positions Lithuania as a strict gateway for MiCA-compliant operations rather than a relaxed crypto hub. Authorities have indicated that enforcement will extend beyond just active platforms; registered entities that maintain websites, accounts, or custody services will also be targeted.

This approach ensures regulators can protect investors while promoting market transparency and integrity.

Europe's Regulatory Focus Shifts from Theory to Active Enforcement

The impending enforcement marks a broader trend of tightening regulations across Europe. MiCA rules, which introduce licensing requirements and investor protections, are transitioning from theory into action.

The region is signaling that unlicensed operations will no longer be tolerated, creating a high-stakes environment for crypto firms in jurisdictions striving for compliance.

In addition to Lithuania, Latvia, located just north of Lithuania, is also working to become a significant Baltic gateway for MiCA compliance. Mārtiņš Kazāks, the governor of Latvijas Banka, the central bank of Latvia, emphasized that the country has the talent, entrepreneurs, and solid financial infrastructure needed to leverage the crypto industry to strengthen its economy.

“Latvia can establish itself as a significant European fintech hub not merely due to ambition but because the foundations are already in place,” stated Kazāks.

Under these circumstances, global crypto platforms are racing to achieve MiCA compliance before enforcement begins.

KuCoin, among the largest cryptocurrency exchanges globally by trading volume, has recently become MiCA-compliant following approval from the Austrian Financial Market Authority. The exchange highlighted the importance of regulated crypto access and its commitment to operating within the new legal framework in its announcement.

”Big news for Europe, bigger news for the world! 🌍 KuCoin EU is now officially MiCAR-compliant and approved by the Austrian FMA! Secure, regulated crypto access is coming to the EU very soon. The future of crypto is global and compliant. Let’s go! 🚀#KuCoin #MiCAR,” they posted on social media.

Coinbase also took steps four months ago to meet EU compliance with MiCA-compliant documentation.

Outside of Europe, Lithuania’s actions reflect similar developments in other regions, such as the United Arab Emirates, which has enacted broad Central Bank reforms criminalizing unlicensed crypto services, including self-custody wallets and market-data tools.

These parallel measures underline a growing global focus on regulation, compliance, and investor protection.

As the December 31 deadline approaches, crypto firms in this Baltic EU state have only days to secure their licenses or initiate orderly wind-downs. With regulators set to act, the coming week could significantly alter the European crypto landscape, leading to the elimination of non-compliant operators and ushering in a new era of strict MiCA enforcement.