The crypto card industry is currently facing its most significant infrastructure test since the 2023 collapse of Railsr. Within the last 30 days, two major European Banking-as-a-Service (BaaS) providers—Quicko (Poland) and UAB Monavate (Lithuania)—have been hit with severe regulatory actions, leaving thousands of cardholders in limbo.
This crisis highlights a critical vulnerability in the "off-ramp" ecosystem: most crypto cards are white-label products that rely a tiny handful of licensed intermediaries. When the intermediary fails, the card dies instantly.
Why This Topic Matters Now
For the average user, a crypto card feels like a bank account. In reality, it is a complex stack of partnerships. If you use a card issued by a BaaS partner that loses its license, you face:
- Instant Service Cessation: Your physical and virtual cards stop working without warning.
- Fund Freezes: While funds are usually "safe" in safeguarded accounts, accessing them can take weeks or months during a transition.
- Reputational Risk: Many smaller "fly-by-night" crypto cards may never recover from an issuer switch.
Core Explanation: The Regulatory Clean-Out
European regulators, led by the Bank of Lithuania and the Polish KNF, are aggressively cleaning out Electronic Money Institutions (EMIs) that prioritized rapid growth over Anti-Money Laundering (AML) and Know Your Customer (KYC) culture.
The Quicko Revocation (Poland)
On January 21, 2026, the Polish Financial Supervision Authority (KNF) officially revoked Quicko's license as a national payment institution. The regulator cited a failure to ensure "prudent and stable management." Quicko must now terminate all client agreements by April 2026 and is prohibited from taking on new business.
The Monavate Restrictions (Lithuania)
UAB Monavate, a major hub for European crypto cards, was ordered by the Bank of Lithuania to stop providing services to several high-profile partners, including Brighty, Kulipa, and Immersve. This was followed by a €270,000 fine for breaches related to safeguarding customer funds and internal controls.
Market Benchmarking and Cost-Risk Math
The "BaaS Risk" is a hidden cost that doesn't appear on a card's fee schedule but can wipe out 100% of your liquidity in an instant.
- Counterparty Concentration: Over 60% of European crypto cards rely on just 4 major BaaS providers.
- The "Safeguarding" Delay: While funds are legally required to be safeguarded at a 1:1 ratio in separate bank accounts, the audit and release process following a license revocation can take 90 to 180 days.
- Yield Loss: During a freeze, users lose out on the APY or staking rewards they would have earned, plus the opportunity cost of not being able to trade their assets during market volatility.
For a cardholder with a $10,000 balance, a 3-month freeze represents a $250 loss in potential yield (at 10% APY) plus the risk of asset price movement.
Market Impact: The "Frozen" Cards
The most visible victim of this crackdown has been Brighty. As of January 1, 2026, Brighty cards were temporarily frozen as the company scrambled to migrate to a new service provider. Users have been informed that their cards may remain unusable for 4 to 6 weeks while the technical integration is completed.
This "migration window" is the most dangerous time for users, as it tests the operational resilience of the crypto brand you actually signed up with.
How to Protect Your Funds
In light of this crisis, SpendNode recommends a "Tiered Custody" approach to crypto card spending:
- Identify the Issuer: Look at the back of your physical card or the "Legal" section of your app. If the issuer is a small, third-party EMI you've never heard of, keep your balance low.
- Favor Principal Members: Cards like Wirex or Coinbase hold direct principal memberships with Visa/Mastercard, meaning they don't rely on mid-tier BaaS providers like Quicko.
- Avoid "Offshore" Hubs: Be wary of cards issued out of jurisdictions with light-touch regulation (e.g., certain Caribbean or Central American hubs) if you are living in the EEA or US.
- Just-In-Time (JIT) Funding: Use cards that allow you to keep your funds in your own wallet (Self-Custody) until the moment of the transaction. If the card issuer fails, your crypto is still in your keys.
FAQ
Is my money gone if my card is frozen?
Usually, no. Under EU/UK law, EMIs must "safeguard" customer funds in separate accounts at a regulated bank. However, you may lose access to that money while the issuer settles its obligations or moves to a new partner.
Which cards are affected?
Currently, cards using Quicko or Monavate as their primary issuer are at high risk. This includes Brighty (confirmed frozen) and potentially several smaller virtual card providers focusing on the EEA market.
How can I tell who issues my card?
Check the "Card Terms" in your app or the fine print at the bottom of the issuer's website. Look for phrases like "Card issued by [Name] pursuant to a license by Visa/Mastercard."
Overview
The BaaS crisis is a painful but necessary "maturation event" for the crypto card industry. As MiCA (Markets in Crypto-Assets) regulation fully takes hold in 2026, we expect to see further consolidation. Only the issuers with a deep "compliance culture" will survive. For users, the message is clear: Verify the infrastructure, not just the rewards.
Recommended Reading
- Understanding Self-Custody Crypto Cards
- MiCA 2.0 and the Future of Crypto Cards
- How to Audit Your Card Issuer
