The existing regulations dedicated to the provision of services in the field of crypto-assets in the European Union were not comprehensively regulated, and one of the manifestations of the interest of the EU legislator in the area of crypto-assets was the introduction of provisions on "virtual currencies" in the AML V (Anti-Money Laundering) Directive and the imposition on Member States the obligation to maintain registers for entities operating in the field of virtual currencies (formerly VASPs).
Furthermore, the legal situation across member states regarding the provision of crypto-asset services was inconsistent, leading to differing treatment of such activities by each country. Some countries adopted a more liberal approach, while others were more restrictive regarding the services provided.
With the entry into force of the MiCA (Markets in Crypto-Assets) regulation, the legal situation of crypto-asset service providers (hereinafter referred to as CASPs) will change significantly, through the unification of regulations within the European Union, the introduction of a permit for the provision of crypto-asset services, and the strengthening of Member States' supervision of the activities carried out by CASPs.
Differentiating crypto-asset services
The MiCA Regulation introduces a catalogue of services that a CASP may provide after obtaining the appropriate authorization, which include:
- providing custody and administration of cryptoassets on behalf of clients;
- operating a crypto-asset trading platform;
- exchanging cryptoassets for cash;
- exchanging cryptoassets for other cryptoassets;
- executing crypto-asset-related orders on behalf of clients;
- crypto-asset placement;
- accepting and transmitting crypto-asset orders on behalf of clients;
- crypto-asset consulting;
- crypto asset portfolio management;
- providing crypto-asset transfer services on behalf of clients.
Requirements for obtaining a permit to provide services
One of the most significant changes that MiCA introduces for current and future CASPs is the requirement to obtain authorization for cryptoasset services. To obtain authorization, CASPs must meet the following requirements:
- they must be a legal entity or other enterprise; or one of the financial entities listed in MiCA (e.g. credit institution, electronic money institution);
- They must have their head office in a Member State where they conduct at least part of their business related to crypto-asset services. Their place of effective management must be in the Union and at least one of their directors must reside in the Union;
- must submit an application to the competent authority of their home Member State (in the case of Poland, this will be the Polish Financial Supervision Authority) for authorization to operate as a crypto-asset service provider. The information provided in the application will depend on the type of services the CASP will provide.
Cross-border provision of crypto-asset services
Obtaining a CASP authorization allows for the easier provision of its services in other European Union member states. A CASP interested in providing its services cross-border should provide the competent authority of its home Member State with:
- a list of the Member States in which it intends to provide its services;
- crypto-asset services that it intends to provide on a cross-border basis;
- the start date of the planned provision of crypto-asset services;
"Reverse solicitation" – an exception for third countries
The MiCA Regulation, like MiFID II (Markets in Financial Instruments Directive), introduces a "reverse solicitation" model. In the case of MiCA, this model allows third-country firms (not licensed by a CASP) to provide crypto-asset services to clients within the European Union, but only at the client's request.
This means that a customer from the EU can, on their own initiative, use services provided by a third-country business that does not hold a CASP authorization. However, conversely, such a business cannot force the business to take the initiative to provide its services to a European customer. In such a situation, they must obtain a permit.
We remind you to register for our free webinar!
We cordially invite those interested in, conducting, or planning to conduct business in the crypto-asset sector to a webinar organized by our Law Firm, which will be devoted entirely to the MiCA regulation. The webinar is scheduled for September 30, 2024, at 4:00 PM. Registration is available by clicking the link .
This alert is for informational purposes only and does not constitute legal advice.
Legal status as of September 26, 2024
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