Woofun AI reports that mounting compliance costs under the Markets in Crypto-Assets Regulation (MiCA) are compelling licensed crypto firms to reconsider their presence in the European Union, according to Gate Europe CEO Giovanni Cunti.

Woofun AI data shows that the financial strain on licensed entities has intensified following the conclusion of the 18-month transition period, which ended on July 1. Speaking on Cointelegraph’s Chain Reaction, Cunti highlighted that stricter regulatory requirements have created significant barriers for new entrants, while existing licensees struggle to absorb the ongoing operational expenses required to maintain authorization under the framework.

Innovation faces particular pressure as high-profile non-compliant cases illustrate the regime's rigidity. Binance, the world’s largest crypto exchange by trading volume, failed to secure a MiCA license before the deadline, prompting service restrictions in parts of Europe. Cunti warned that such stringent rules leave less room for experimentation compared to jurisdictions with lighter oversight, potentially driving startups and projects to seek launch opportunities elsewhere.

Despite these exit risks, the register of authorized service providers continues to expand, albeit at a decelerating pace. On Friday, the European Securities and Markets Authority added 14 crypto-asset service providers (CASPs) to its list, bringing the total to 294. This follows an earlier update where 37 firms were added after the July 1 transition deadline, reflecting a shifting competitive landscape within the bloc.

The regulatory burden is consolidating the market, reducing the number of active participants from thousands of operators to hundreds. This contraction creates substantial opportunities for remaining crypto service providers, as customers migrate to compliant platforms to maintain access to the European market.