The Markets in Crypto-Assets Regulation (MiCA) was formally adopted and came into force in June 2023, with a series of phased implementation deadlines. MiCA sets out formal authorisation requirements for crypto-asset service providers (CASPs), aligning the sector more closely with traditional financial regulation. As the implementation of MiCA progresses, firms operating in the EU must understand and prepare for this new compliance landscape.
What is MiCA and Who Does it Apply To?
MiCA is designed to harmonise rules across all member states for the regulation of crypto-assets. The regulation introduces a comprehensive framework for CASPs across the European Union, applying to a broad range of crypto activities that were previously outside the scope of existing EU financial regulation. MiCA applies to CASPs offering services such as:
- Operating trading platforms
- Providing custody or wallet services
- Facilitating crypto-to-fiat and crypto-to-crypto exchange services
- Executing orders and providing portfolio management or investment advice on crypto-assets
It also applies to the regulation of e-money tokens (EMTs), also known as stablecoins, utility tokens and broader crypto-asset issuance.
What are the Authorisation Requirements for Crypto-Asset Providers?
Under MiCA, firms intending to provide crypto-asset services in the EU must apply for authorisation through the relevant National Competent Authority (NCA). Once granted, this authorisation offers passporting rights, allowing firms to operate across all EU member states without needing separate national approvals. Key authorisation requirements include:
- Capital Requirements: Firms must meet minimum capital thresholds, which vary depending on the type of service offered. These are designed to ensure financial resilience and protect client assets
- Governance Checks and Fit-and-Proper Assessments: Senior management and board members must demonstrate appropriate experience, integrity, and governance capability
- Safeguarding of Client Assets: Firms must implement protocols to segregate and protect client holdings, with clear record-keeping and reconciliation processes
- ICT and Risk Management: Firms are required to maintain secure, resilient ICT systems, supported by risk management frameworks that address cybersecurity, business continuity, and operational resilience
- Disclosure and Transparency Obligations: CASPs must provide clients with clear and accessible information on risks, fees, and terms of service
- White Paper Requirements: Issuers of crypto-assets must publish a detailed white paper outlining the asset’s characteristics, risks, rights, and governance. These will be subject to NCA notification or approval depending on the asset
How can Firms Prepare for MiCA?
Whether entering the market for the first time or transitioning from a previously unregulated model, firms must approach MiCA compliance as a strategic priority. Firms should prepare by:
- Assessing Regulatory Scope: Determine whether their activities fall within MiCA’s scope and identify the appropriate authorisation pathway
- Preparing Internal Documentation: Update governance documents, risk frameworks, ICT policies, and compliance manuals to meet MiCA requirements
- Auditing Existing Operations: Conduct an internal audit or gap analysis to identify areas of non-compliance, especially in customer safeguarding, capital adequacy, and disclosure
- Engaging with NCAs Early: Proactive engagement with the relevant NCA can provide valuable feedback and support a smoother application process
- Mapping Cross-Border Activity: Firms with operations in multiple EU states should document their passporting intentions and evaluate any related legal or tax implications
MiCA represents a major and positive shift in the regulatory treatment of crypto-assets within European markets. Firms must act early and align with the regulation’s expectations by strengthening their transparency, governance and risk management frameworks. By working closely with regulators and prioritising compliance, CASPs can scale securely and sustainably within a harmonised European framework. If you require support with your MiCA obligations one of our experts will be happy to walk you through our offering.
