The European Securities and Markets Authority (ESMA) has launched its first supervisory sweep of licensed crypto firms, testing operational resilience and custody controls under the EU's Markets in Crypto-Assets (MiCA) framework. The Common Supervisory Action (CSA) examines custody services and assesses whether firms have effective operational resilience measures rather than relying solely on regulatory approval. As outlined by ESMA, supervisors will examine digital operational resilience in several critical areas, including private key and storage management, transaction controls, incident response procedures and reliance on third-party technology providers. The review comes soon after MiCA's transitional period ended, making it one of the first coordinated supervisory exercises under the EU's crypto rulebook. According to Sebastien Dessimoz, co-founder of digital asset infrastructure company Taurus, the message from regulators is that obtaining a MiCA licence is only the starting point for custodians, with custody providers now expected to demonstrate that their operational controls can withstand real-world risks.
Binance CEO Richard Teng has cast doubt on the effectiveness of the EU's crypto regulatory regime, MiCA, citing capital flow patterns from the exchange. In an interview with Reuters, Teng highlighted that 70% of funds withdrawn by EU users ended up in unregulated self-hosted wallets, while only 30% flowed to MiCA-regulated entities. Teng questioned whether the MiCA regime can serve its purpose of minimizing risks for users, noting that funds going to self-hosted wallets amplify risk because you don't have oversight and AML controls. Binance failed to get MiCA approval and withdrew its initial Greek application, leaving the platform required to allow users to move their funds and stop new sign-ups of EU citizens. The regulatory landscape has created operational challenges, with companies operating under 'Pending Application' now facing €15 million ($17.1 million) in fines or handing over 12.5% of their annual turnover.
CryptoQuant data showed that stablecoin withdrawals intensified last month and extended into the first week of July, with USDC reserves on Binance falling by 21% from over $6 billion to about $4.47 billion. That represents nearly $2 billion in outflows, which CryptoQuant called 'regulated capital flight'. In the past week alone, the daily average Binance stablecoin outflows hit $115 million. Based on Teng's insights, about $2.1 billion could have gone to unregulated self-hosted platforms while only $900 million moved to regulated venues like Coinbase and OKX. The outflows could be linked to users moving out their funds after the USDT delisting across the EU, with USDT reserves on Binance also dipping by over $1 billion during the same period. CoinMarketCap showed the outflows were as high as $5 billion in the past 30 days, though OKX, one of the MiCA-approved entities, also saw $1 billion in net outflows.
The European Securities and Markets Authority (ESMA) has registered over 270 crypto-asset service providers (CASPs) under the EU's Markets in Crypto-Assets (MiCA) regulation, marking a significant milestone in regulatory compliance across Europe. However, MiCA's full implementation on July 1, 2026, has transformed the EU crypto market with devastating consequences - overnight, MiCA wiped out 80% of the 3,000+ companies holding VASP licenses. Only 244 companies managed to push past MiCA regulatory scrutiny, while the rest 2,700+ companies had to make difficult choices to stay afloat. The MiCA regulation aims to enhance consumer protection and promote innovation within the crypto space, with registered CASPs now subject to mandatory compliance standards, though the register notably lacks any registered asset-referenced token (ART) issuers, highlighting ongoing challenges in attracting stablecoin issuers under the current regulatory framework.
European Commission officials are planning a review of parts of the MiCA framework from 2027 after the United States enacted the GENIUS Act, according to a Euronews report. The review is expected to examine how non-EU stablecoin issuers should be treated under existing rules as international crypto regulation continues to develop. Industry participants view this as an early indication of how MiCA supervision could evolve, with Markus Levin, co-founder of blockchain infrastructure company XYO, telling Cointelegraph that receiving MiCA authorization and proving operational resilience are separate challenges. Meanwhile, current market data shows MiCA's regulated exchange ecosystem continuing to expand, with DefiLlama's MiCA exchange dashboard ranking Kraken as the largest regulated venue by liquidity, featuring more than $400 million in spot liquidity and over $220 million in perpetual liquidity. Coinbase remained the second-largest regulated exchange by liquidity, underscoring the growing scale of platforms operating under Europe's licensing framework.
