Types of Activities with a CASP License

• Providing custody and administration of crypto-assets on behalf of clients

  This service means safekeeping or controlling, on behalf of third parties, crypto-assets or the means of access to such crypto-assets, where applicable in the form of private cryptographic keys

• Operation of a trading platform for crypto-assets

  This service contains of the management of one or more multilateral systems, which brings together or facilitates the bringing together of multiple third-party buying and selling interests for crypto-assets – in the system and in accordance with its rules – in a way that results in a contract, either by exchanging one crypto-asset for another, or a crypto-asset for funds

• Exchange of crypto-assets for funds

  Exchange of crypto-assets for funds means the conclusion of purchase or sale contracts concerning crypto-assets with clients for funds by using proprietary capital

• Exchange of crypto-assets for other crypto-assets

  Exchange of crypto-assets for other crypto-assets means the conclusion of purchase or sale contracts concerning crypto-assets with customers for other crypto-assets by using proprietary capital

• Execution of orders for crypto-assets on behalf of clients

  This service means concluding agreements to buy or to sell one or more crypto-assets or to subscribe for one or more crypto-assets on behalf of third parties and includes the conclusion of agreements to sell crypto-assets at the moment of their issuance

• Placing of crypto-assets

  This service includes the marketing, on behalf of or for the account of the offeror or of a party related to the offeror, of crypto-assets to purchasers. Before placing the crypto-assets CASP shall obtain the agreement of the issuers or any third party acting on their behalf

• Reception and transmission of orders for crypto-assets on behalf of clients

  This service means the reception from a person of an order to buy or to sell one or more crypto-assets or to subscribe for one or more crypto-assets and the transmission of that order to a third party for execution

• Providing advice on crypto-assets

  This service means offering, giving or agreeing to give personalized recommendations to a third party, either at the third party’s request or on the initiative of the CASP providing the advice, in respect of one or more transactions relating to crypto-assets, or the use of crypto-asset services

• Providing portfolio management on crypto-assets

  Service includes managing portfolios in accordance with mandates given by customers on a discretionary client-by-client basis where such portfolios include one or more crypto-assets; CASP shall not accept and retain fees, commissions, or any monetary or nonmonetary benefits paid or provided by an issuer, offeror, person seeking admission to trading, or any third party, or a person acting on behalf of a third party, in relation to the provision of the service to their clients

• Providing transfer services for crypto-assets on behalf of clients

  This service means transfer, on behalf of a natural or legal person, crypto-assets from one distributed ledger address or account to another. Such service may be provided without virtual currency wallet opened for the CASP’s customer

Who Can be Your Client?

• Retail clients

  These are individual consumers who invest in or trade crypto-assets for personal purposes, such as wealth management, speculation, or payments. CASPs provide services like crypto trading platforms, wallets, or advisory services tailored to their needs

• Corporate clients

  Companies utilizing blockchain or crypto-assets for business operations, for example, accepting crypto payments. CASPs assist in handling payments-and maintaining compliance with regulations

• Institutional investors

  Large financial entities, including hedge funds, asset managers, or private equity firms, seek exposure to crypto-assets for portfolio diversification or speculative purposes. CASPs offer institutional-grade services such as over-the-counter (OTC) trading, custody

• Non-profit organizations

  Charitable institutions accepting donations in crypto-assets may rely on CASPs for wallet services, exchange solutions, and compliance assistance

• Payment processors and merchants

  Businesses or platforms that facilitate crypto-based transactions or accept crypto payments may rely on CASPs for exchange services, custody solutions, or compliance tools

Creation of Trusting Relationships with Clients and Stakeholders

Trust is the foundation of any successful business relationship, and this is especially true in the cryptocurrency industry, where volatility and uncertainty are major challenges. The introduction of the EU’s MiCA regulation of crypto-asset markets highlights the importance of trust through licensing and compliance

A MiCA licensing signifies transparency, accountability and legitimacy, providing customers and stakeholders with confidence that their transactions are conducted within a secure and regulated framework

• Transparency

  Licensed companies operating under MiCA are required to disclose important information to clients and regulators. This transparency is critical in a market known for its unpredictability, as it allows users to ensure that the platform adheres to strict compliance standards. Providing clear and consistent information about transactions, fees and risks builds trust and promotes informed decision-making

• Accountability

  MiCA-licensed companies are accountable to national competent authorities and the general regulatory framework. This accountability ensures that companies adhere to high levels of ethical standards and take robust measures to prevent fraud and misconduct. Clients and stakeholders value this commitment to responsible practices as it reduces the risk of exploitation and malpractice

• Legality

  The cryptocurrency market has faced the problem of fraud and unscrupulous operators, which undermines the reputation of the industry. MiCA-licensed companies are vetted for compliance and trustworthiness, which allows them to be considered legitimate players in the market

• Strengthening long-term relationships

  Trust is the critical factor in establishing long-term relationships with clients, investors and partners. Licensed platforms demonstrate a commitment to security, compliance and ethical behavior, attracting loyal users who value these qualities

How to Become MiCA Compliant?

To operate legally and successfully within the EU under MiCA, crypto businesses must achieve compliance with its requirements. Here’s how MiCA regulatory roadmap looks like:

• Consulting initiation

  The first step is to engage legal, compliance, and regulatory experts (as Manimama Law Firm) to assess the business’s current operations and understand how MiCA applies to your activities. This stage involves identifying gaps in compliance and setting the foundation for regulatory alignment

• Initiating regulatory dialogue

  Open communication with the relevant NCA is crucial. This includes clarifying requirements, seeking guidance on specific regulatory issues, and ensuring the authority is aware of your intent to apply for compliance under MiCA

• Audit and regulatory strategy development

  Conduct a thorough internal audit of your business operations, including governance, AML/KYC measures, risk management, and technical infrastructure. Based on the findings, develop a comprehensive strategy to address gaps and align with MiCA’s requirements

• Optimizing jurisdiction selection

  Choose an EU member state for registration that aligns with your business goals and operational needs. Factors to consider include the regulatory environment, tax policies, market opportunities, and ease of doing business. The selected jurisdiction’s NCA will oversee your compliance and grant licensing

• Implementation planning

  Develop a detailed plan for implementing the necessary changes to meet MiCA requirements. This includes timelines, resource allocation, training for staff, and setting up systems for compliance monitoring, reporting, and incident response

• Application submission

  Once all compliance measures are in place, prepare and submit your application to the NCA. This includes providing required documentation, such as your business plan, operational policies, proof of capital adequacy, etc

• Full compliance

  After receiving regulatory approval, ensure ongoing compliance by maintaining robust systems, updating policies as needed, and adhering to reporting and auditing requirements. This stage is critical for sustaining trust with customers and meeting regulatory expectations consistently

Challenges in MiCA Licensing

Navigating the licensing process under the MiCA regulation poses several challenges for crypto businesses. Here are some key hurdles:

• High cost of compliance

  Challenge

  Achieving compliance involves costs related to hiring legal experts, upgrading systems, meeting capital requirements, and undergoing audits

  Impact

  Startups and smaller businesses may find it difficult to bear these expenses, potentially limiting innovation in the sector

• Jurisdictional differences

  Challenge

  Although MiCA aims to create a uniform system, member states may have additional local requirements or interpret the rules differently

  Impact

  Businesses have to navigate both EU-wide standards and country-specific rules, which complicates the licensing process

• Lengthy application process

  Challenge

  The licensing process involves extensive documentation, audits and inspections by NCAs, often resulting in delays

  Impact

  Businesses may experience disruptions in operations or disrupted startup dates, negatively impacting their competitiveness in the market

• Balance between innovation and regulation

  Challenge

  Striking a balance between complying with regulations and encouraging innovation can be difficult, as rigid rules can stifle creativity and experimentation

  Impact

  Entrepreneurs may feel constrained, which limits the development of innovative blockchain solutions