Event Overview

Recently, Lithuanian regulatory authorities initiated the implementation arrangements for MiCA, requiring all institutions providing cryptocurrency-related services to users within the country to complete their MiCA license applications by December 31, 2025, or face the risk of being deemed illegal operators. According to publicly available registration data, there are currently about 370 registered virtual asset service providers (VASP) in Lithuania, but as of now, only about 30 have submitted MiCA-related license applications, resulting in an application rate of less than 10%. Market research also indicates that there are approximately 120 active institutions that are operational and providing continuous services to users, which means a significant number of entities that are already "running business" remain in limbo. As MiCA rules gradually take effect locally, Lithuania, which was previously known for its lenient entry and simple registration, is being reshaped into a compliance hub characterized by strict licensing and ongoing supervision. This shift is expected to rewrite Lithuania's role in the EU's cryptocurrency service landscape and have spillover effects on business layouts targeting EU users.

Data and Compliance Gaps

From the data perspective, the number of registered VASPs is about 370, while only around 30 have actually submitted MiCA license applications, highlighting a significant gap in compliance progress that reflects the industry's inadequate preparation for the new regulations and multiple constraints such as costs and time. Considering that there are about 120 actively operating institutions in the market, only a few have entered the formal application stage, leaving a considerable proportion of core service providers in a state of uncertainty regarding their licensing prospects, which poses risks to business continuity and client asset arrangements. Under the current legal framework, institutions that continue to provide related services without authorization may face criminal liabilities, including up to four years of imprisonment. The accompanying administrative and criminal risks have significantly raised the barriers to entry, increasing fixed costs related to compliance, legal, and auditing aspects. In this context, regulation is gradually shifting from a primarily registration-based model with relatively low thresholds to a licensing system that requires review and ongoing compliance monitoring, which is expected to substantially squeeze out small-scale service providers lacking capital, technology, and compliance teams, driving a wave of "marginal players" to accelerate their exit.

Service Withdrawal and Model Migration

According to industry estimates, there are currently over 300 VASPs in Lithuania facing the risk of ceasing operations or being regulated out under the MiCA framework. If this scale gradually materializes, it will directly compress the local supply of services that can be considered "fully compliant" and put pressure on various institutions that rely on Lithuanian licenses to reach EU users. In a tightening regulatory environment, there are market voices suggesting that some service providers may consider adopting a so-called "reverse solicitation" approach, which leans more towards "passive service" compliance paths, meaning they do not actively market to specific markets but only respond to proactive demands from overseas users. However, the feasible boundaries and proof responsibilities surrounding this model remain unclear from the regulatory stance, and related claims mainly stem from market discussions rather than official documents. For small and medium-sized VASPs with limited capital that find it difficult to bear the full compliance costs of MiCA, a realistic path is to choose to exit the EU unified licensing framework or migrate their business and teams to jurisdictions with more lenient regulations and lower licensing costs. Such migrations will drive the redistribution of on-chain service providers across different global jurisdictions, subsequently affecting node deployment, fiat currency entry and exit, and the geographical landscape of compliant user channels.

Spillover Effects on the EU Market

Lithuania has long been regarded as one of the hubs for cryptocurrency services targeting EU users, with a low-cost registration environment and a relatively friendly regulatory atmosphere attracting a large number of trading, custody, and payment-related businesses to establish locally. As the enforcement of MiCA intensifies and licensing thresholds rise, some businesses that originally "affiliated" with Lithuania to access the EU market may be forced to concentrate in other member states, seeking to establish themselves in jurisdictions with more mature regulatory resources and clearer approval processes. In the short term, the clearing and contraction of a large number of small and medium-sized service providers may weaken the order depth and market-making participation of certain tokens in the EU region, especially for small and mid-cap assets that rely on long-tail platforms and regional OTC channels, where liquidity discount risks may be amplified. Under the unified rules of MiCA, Lithuania's strong enforcement is expected to have a demonstration effect on other member states. Once multiple countries tighten simultaneously, the market structure may accelerate the concentration towards a few large, compliant service providers, forming a more pronounced oligopoly, with leading platforms and custodians gaining enhanced control over compliance entry, pricing, and asset listings.

Sentiment and Capital Linkage

In a broader market context, the recent cryptocurrency fear and greed index briefly dipped to around 20, falling into the "extreme fear" range. Coupled with the tightening of EU regulatory enforcement, this can amplify investors' sensitivity to compliance and policy uncertainties, making the originally emotional sell-offs more pronounced. Under high-pressure regulatory expectations, both on-site and off-site funds tend to flow towards leading trading platforms, custodians, and payment channels with clear compliance expectations and defined licensing paths, in order to reduce the risks of interruptions and accountability brought about by future compliance shocks. This preference will further reinforce the capital siphoning effect of leading institutions. In the short term, the uncertainty brought about by Lithuania's MiCA enforcement may exacerbate risk-averse sentiment and selling pressure on assets related to small and medium-sized platforms, leading to some "gray area" assets facing valuation discounts. However, from a medium to long-term perspective, once compliance boundaries are clearly defined, the market will have the opportunity to reprice the risk premiums between compliant assets and gray assets, releasing revaluation space for targets with more transparent risks and fuller information disclosure.

Medium to Long-term Assessment

From a cyclical perspective, the implementation of MiCA in Lithuania is likely to create a compliance vacuum in the short term: on one hand, a large number of existing VASPs have not completed their applications, leaving service continuity and client arrangements to be clarified; on the other hand, the pressure for regulatory clearing and mandatory rectification is accelerating. However, in the medium term, more transparent entry standards and ongoing regulatory requirements are expected to enhance the visibility and information symmetry of the entire EU-related market, reducing the potential impact of "shadow service providers" on user safety and system stability. For leading institutions, once they complete their MiCA licensing layout ahead of others and obtain landing qualifications in multiple EU countries, they will have the opportunity to gain structural advantages in future traffic distribution and new asset pricing, controlling compliance entry and major trading depth. For investors and institutional funds, the key focus moving forward will be to track the rhythm of the actual licensing list published in Lithuania, as well as the follow-up situation of other EU member states in terms of enforcement intensity and timelines, and based on this, assess which platforms and assets have truly completed "compliance fulfillment," thereby re-evaluating their revaluation space in terms of valuation and risk premiums.

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