The Markets in Crypto Assets Regulation (MiCAR) marks a transformative shift in EU crypto regulation. It aims to foster innovation while protecting consumers, setting strict requirements for crypto asset service providers (CASPs) on governance, transparency, and market conduct.
Key Dates and Transitional Period
From December 30, 2024, CASPs operating in the EU must secure authorisation from the regulator to continue providing services across the EU. A transitional period for existing virtual asset service providers (VASPs) runs until December 29, 2025, allowing VASPs to operate without a MiCAR licence during this time. Those not seeking authorisation must wind down operations by the deadline.
CASP Authorisation Process
Outlined a structured authorisation process, requiring firms to:
- Engage with the CBI early and present their business model.
- Submit a detailed “Key Facts Document” (KFD) covering services, governance, capital, AML, ICT security, and wind-down plans.
- Address any feedback from the CBI before submitting a formal application.
Expectations for CASPs
To secure authorisation, CASPs must meet the following regulatory expectations:
- Governance: Establish strong, local leadership and robust risk management.
- Client Asset Protection: Ensure full control and segregation of client assets.
- Operational Resilience: Maintain continuity in services like Distributed Ledger Technology (DLT).
- Transparency: Provide clear ownership structures and proactively manage conflicts of interest.
- AML Compliance: Implement stringent measures to combat money laundering and financial crime.
- Consumer Protection: Align with the Consumer Protection Code, which now includes CASPs.
Next Steps for CASPs
The regulators release its application form soon. Firms should act now to prepare, focusing on governance, client asset protection, operational resilience, and AML controls. Early engagement with the regulators is critical for navigating this complex process.
Early engagement with regulators is essential for a successful MiCAR authorisation process. We offer comprehensive support throughout each phase:
- Pre-Application Preparation: We assist in structuring your core team, planning compliance strategies, and engaging with regulators early to ensure your business model aligns with regulatory expectations.
- Application Process Management: Our team helps you draft a robust Regulatory Business Plan, secure necessary banking relationships, and establish a solid governance framework that meets MiCAR requirements.
- Regulatory Interaction & Review: We manage feedback from regulators, address any required iterations, and prepare your key personnel for interviews, ensuring a smooth approval process.
- Post-License Compliance & Scaling: After securing your license, we support you in meeting ongoing licensing conditions, ensuring seamless regulatory reporting, and planning for future business expansions.
Contact us today for a free consultation and let us guide you through every step of the MiCAR journey!
