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13 January 20253 minute read

EU crypto-assets regulatory framework: application of the landmark Markets in Crypto-Assets Regulation (MiCA)

Initially presented by the European Commission as part of the Digital Finance Package (along with other legislative proposals such as the DLT Pilot Regime or DORA), Regulation (EU) 2023/1114 of 31 May 2023 on markets in crypto-assets1 (the Markets in Crypto-Assets Regulation or MiCA) sets out a comprehensive and harmonised framework for the regulation of crypto-asset markets across the European Union (EU). By regulating the offer of crypto-assets and the provision of crypto-asset services in the EU, MiCA lays the foundation for a new harmonized regulatory framework for crypto-assets in the EU.

MiCA fully applies since 30 December 2024. In this alert we analyse the key elements of the regime, assessing its impact for the market and highlight the opportunities they will bring.

MiCA distinguishes three types of crypto-assets:

  • The first type is the e-money token (EMTs), which is a crypto-asset that aims to stabilise its value by referencing only one official currency.
  • The second type is the asset-referenced token (ARTs), which aims to stabilise its value by referencing another value or right, or combination thereof, including one or several official currencies.
  • Finally, the third type is a catch-all type, referring to all crypto-assets other than ARTs and EMTs, and expressly including utility tokens.

MiCA also excludes certain crypto-assets from its scope. This is the case for crypto-assets that qualify as financial instruments under Directive 2014/65 (MiFID II). To distinguish between crypto-assets and financial instruments, on 17 December 2024 ESMA published guidelines on the criteria and conditions for the qualification of crypto-assets as financial instruments 2. According to ESMA, the qualification depends on the specific characteristics and nature of crypto-assets. The features, design and rights attached to crypto-assets should be considered, based on a “substance over form” approach. MiCA shall also not apply to crypto-assets that are unique and not fungible with other crypto-assets, unless the de facto features of the tokens or features linked to their de facto uses make them either fungible or not unique.

MiCA lays down rules for offerors to the public and people seeking admission to trading of crypto-assets.

 

Public offer of crypto-assets (other than asset-referenced tokens and e-money tokens)

Crypto-asset white paper

Offerors or people seeking admission to trading of crypto-assets in the EU should draw up, notify to the competent authority and publish a crypto-asset white paper, which is an information document containing mandatory disclosures. The white paper should notably contain general information on the project, the rights and obligations of token holders, the underlying technology and the risks, as further described under Annex I to MiCA. A number of mandatory statements, warnings and other summaries must also be included. The white paper shall be prepared according to the standard forms, formats and templates provided under Commission Implementing Regulation (EU) 2024/2984 of 29 November 20243.

White papers for crypto-assets (other than ARTs and EMTs, for these please cf. below at 2.2 and 2.3) should be notified to the national competent authority before being published but should not be approved. National competent authorities may request amendments to or the inclusion of additional information in the white papers. If MiCA-requirements are not met, they may suspend or prohibit an offer to the public.

Marketing communications

Any marketing communication relating to a public offer of crypto-assets (including of ARTs and EMTs) should comply with MiCAs requirements, in particular the requirement to be fair, clear, not misleading and consistent with the information provided in the white paper, and be published. Marketing communications do not require a prior approval from national competent authorities but shall be notified upon request. These authorities however have the ex post power to assess compliance of these communications with MiCA and request amendments.

Exemptions

Some offers of crypto-assets are not subject to MiCA. This is the case for offers to the public of crypto-assets for free or that are automatically created in the context of a consensus mechanism. Also exempt are offers of crypto-assets that can only be used in a limited network or for utility tokens providing access to a good or service that exists or is in operation.

Other small-sized offers, while being in scope of MiCA, benefit from a lighter regime as they neither require the preparation of a white paper nor to publish marketing communications. This is the case for offers made to fewer than 150 people per EU Member State, that are addressed solely to qualified investors or whose total consideration does not exceed EUR1 million over a period of 12 months.

However, these exemptions shall not apply where the communications related to the offer mention the intention to seek admission to trading of crypto-assets.

 

Offer of asset-referenced tokens (ARTs)

Additional requirements apply to public offerings or requests for admission of ARTs to trading. Both require prior authorisation from the competent authority and approval of the white paper. Only EU credit institutions and EU-based entities authorised under MiCA may publicly offer or seek admission to trading of ARTs in the EU.

White papers for ARTs should include specific information on the stabilisation mechanism, the investment policy of the reserve assets, the custody arrangements and the rights provided, as described under Annex II to MiCA. The white paper shall be sent for approval to the national competent authority.

The authorisation requirement is subject to some derogations (eg offer addressed solely to qualified investors or below EUR5 million).

 

Offer of e-money tokens (EMTs)

Specific requirements also apply when issuing e-money tokens. In particular, only authorised electronic money institutions or authorised credit institution are allowed to issue EMTs.

EMTs should be deemed to be electronic money under Directive 2009/10/EU on electronic money4 (EMD II). Therefore, issuers of EMTs should, in principle, comply with the relevant requirements set out in the EMD II on issuance and redeemability of EMTs. The crypto-asset white paper should in particular expressly refer to the right of holders of e-money tokens to redeem their tokens for funds.

 

Regulatory requirements

MiCA further requires offerors and people seeking admission to trading of crypto-assets, ARTs and EMTs, to comply with specific regulatory requirements. They should manage and disclose conflicts of interest, and put in place effective administrative arrangements to ensure their systems and security protocols meet EU standards, as specified by ESMA5. Offerors should also adopt effective arrangements to monitor and safeguard the funds or crypto-assets raised during the offer.

Issuers of ARTs should have robust governance arrangements, including a clear organisational structure and risk management procedures. The members of the issuers management body should be fit and proper and their shareholders should be of sufficiently good repute. Issuers of ARTs should establish a business continuity policy, have strong internal control mechanisms and effective procedures for risk management. They are subject to own funds requirements, proportionate to the issuance size of the ARTs. They should also constitute and maintain a reserve of assets, and set up an adequate custody policy.

As EMTs should be deemed to be electronic money under the EMD II, their issuers should comply with the relevant requirements set out in that Directive.

Finally, ARTs and EMTs will be subject to more stringent requirements if they are deemed as “significant. In particular, issuers of significant ARTs should be subject to higher capital requirements, to interoperability requirements and they should establish a liquidity management policy.

In addition to the offer and admission to trading of crypto-assets, MiCA provides for operational, organisational and prudential requirements at EU level applicable to crypto-asset service providers.

 

Regulated crypto-asset services

MiCA provides for a list of services and activities relating to crypto-assets, the provision of which is regulated and subject to prior authorisation. The list includes among others the custody and administration of crypto-assets, operating a trading platform for crypto-assets, exchange services, execution of orders or providing advice on crypto-assets.

 

CASP authorisation

To provide any of the crypto-asset services regulated under MiCA, an undertaking must first obtain theauthorisation of crypto-asset service provider (CASP), a new regulatory regime introduced by the Regulation . To this end, an application for authorisation must be submitted to the competent authority of the Member State where the entity has its registered office.

MiCA requires CASPs to comply with prudential requirements, including strong organisational requirements. The members of the CASPs management body should be fit and proper and their shareholders should be of sufficiently good repute. They should have sound internal control and risk assessment mechanisms. Further requirements may also apply depending on the crypto-asset services to be provided and due to the specific risks raised by each type of services.

Where an authorisation is granted, it is be valid for the entire EU. In other words, once authorised by one Member State, CASPs are allowed to provide crypto-asset services across the EU, either through a branch (right of establishment), or on a cross-border basis (freedom to provide services).

 

Provision of crypto-asset services by regulated financial entities

MiCA allows some financial institutions that are already regulated in the EU to provide all or some crypto-asset services without having to obtain an authorisation as a CASP, subject to certain notification requirements. For example, regulated credit institutions are allowed to provide any of the crypto-asset services, but investment firms may only provide crypto-asset services considered as equivalent to the investment services and activities for which they are authorised under MiFID II.  

 

Specific considerations for non-EU firms and reverse solicitation

Entities not established in the EU are not allowed to provide crypto-asset services in the EU. Should they wish to do so, they will need to establish a subsidiary in a Member State which shall apply for authorisation as CASP with the national competent authority.

However, MiCA also provides for a reverse solicitation regime. Under this passive servicing regime, where a client established or situated in the EU initiates at its own exclusive initiative the provision of a crypto-asset service or activity by a third‐country firm, the latter is not required to obtain an authorisation as CASP to provide such crypto-asset service or activity. However, ESMA made clear that this exemption must be very narrowly framed and should be regarded as the exception  it cannot be exploited to circumvent MiCA.6

 

Other considerations
  • ESG disclosures: Any principal adverse impact that consensus mechanisms might have on the climate must be adequately identified and disclosed by issuers of crypto-assets and CASPs.
  • Market abuses: Finally, MiCA also lays down specific rules to deter market abuse for crypto-assets. The regime introduced by MiCA prohibits certain behaviours, including insider dealing, unlawful disclosure of inside information and market manipulation related to crypto-assets.
  • Conduct of business rules: Depending on the type of crypto-asset services provided, MiCA sets out specific conduct of business rules that have to be observed.

 

Supervision

Member States must each designate the competent authorities responsible for carrying out the supervisory functions and duties provided for in MiCA. Such authorities are granted with powers to supervise the issuance, offer to the public and admission to trading of crypto-assets, and to supervise CASPs. Those powers include the power to suspend or prohibit the public offering, the admission to trading or the provision of crypto-asset services. Competent authorities also have the power to impose penalties on issuers, offerors or persons seeking admission to trading and on CASPs.

 

Grandfathering regime and transitional measures

MiCA provides for a grandfathering regime, allowing entities providing crypto-asset services in accordance with the applicable national law before 30 December 2024 to continue to do so until 1 July 2026 or until they are granted or refused an authorisation by the national competent authority.

Member States may however decide not to apply the transitional regime or to reduce its duration where they consider that their national regulatory framework is less strict than MiCA. ESMA has provided a list of the relevant decisions of the Member States and issued a Statement guiding CASPs on how to navigate differences in transitional periods when offering cross-border services.

 

Status of delegated regulations and guidance

MiCA makes significant use of delegated regulations, relying on the European Supervisory Authorities (ESAs) and the European Commission (EC) to complete the framework. As highlighted by the EC in its communication on 19 December, there are still some delegated regulations outstanding, which must be adopted by the EC. For example, the regulatory standards regarding the authorisation process for issuers of asset referenced tokens are still outstanding, as the EC has requested the ESAs to adopt some amendments. In other cases, such as the regulatory standards on monitoring, detection and notification of market abuse, the EC must still complete its review.

Similarly, some guidance to be provided by the ESAs under MiCA is still outstanding. For example, ESMA has only published its last set of guidelines on 17 December, including the highly anticipated guidelines on qualification of crypto-assets as financial instruments who provide conditions and criteria for the qualification of crypto-assets as financial instruments. Those guidelines will only apply three months after the publication of the translated versions on ESMAs website.

Belgium

In Belgium, providers of exchange services between virtual currencies and legal currencies and providers of custody portfolio services are currently subject to registration requirements with the Financial Services and Markets Authority (FSMA) and shall comply with the registration requirements set out under the Royal Decree of 8 February 2022. To date, no VASP is registered with the FSMA.

Belgium has also not communicated its position on the grandfathering regime under MiCA. However, since no VASP is currently registered with the FSMA, this transitional regime will not be of use.

 

France

In France, providers of services of digital assets (DASPs) were already regulated by the PACTE law and required a mandatory registration or optional authorisation, depending on the service provided. The French Financial Markets Authority (Autorité des Marchés Financiers – AMF) has confirmed that such authorised/registered providers will be able to benefit from the transition period until 30 June 2026, bearing in mind, that, during this transition period, the providers will not be allowed to benefit from the European passport regime.

The AMF has also started to accept applications to be authorised as a CASP since 1 July 2024.

 

Germany

In Germany, the provision of certain crypto-asset services (in particular crypto-asset custody) has been regulated since 2020, although the definition of these crypto-asset services differs from the definitions under MiCA.

The very recent Act on the Digitisation of the Financial Market (Finanzmarktdigitalisierungsgesetz)7 introduced the new Act on the Supervision of Markets for Crypto-Assets (Kryptomärkte-Aufsichtsgesetz) and amendments to other regulatory laws, eg on AML. The German legislator thus introduced the necessary changes allowing for a smooth application of MiCA in Germany and granting BaFin the supervisory powers to enforce compliance with MiCA-rules and requirements.

This Act also sets out detailed transitional provisions for crypto-asset service providers, taking into consideration the licence requirements already in place since 2020. Amongst others, authorised credit institutions and investment firms whose authorisations on 29 December 2024 included the provision of services related to crypto-assets as defined by the version of the German Banking Act of 22 February 2023, may continue to provide these services in compliance with the German regulatory requirements as applicable on 29 December 2024. Said authorisations are deemed to persist until these institutions have been granted an authorisation under MiCA or have undergone the notification procedure referred to above in Section 3.3, but no longer than until 31 December 2025 (German grandfathering regime). Furthermore, entities providing crypto-asset services in accordance with German law applicable prior to the entry into effect of MiCA and until that moment not subject to an authorisation requirement under German law should have informally notified these activities to BaFin.

The Act on the Supervision of Markets for Crypto-Assets will be complemented by a German Ordinance  on the Transition of the Existing Legal Framework for Crypto-Assets to MiCA (Begleitende Verordnung zur Überführung des bestehenden Rechtsrahmens in Bezug auf Kryptowerte auf die Verordnung (EU) 2023/11148). One part of this German Ordinance will introduce into German law a simplified procedure for authorisation of those entities that have already been authorised under national law to provide crypto-asset services prior to application of MiCA. Furthermore, BaFin issued Notices with Interpretative Information on Crypto-Asset Services under MiCA9and on the Authorisation Requirements for ART and EMT under MiCA10.

 

Ireland

In Ireland, the Central Bank of Ireland (CBI) has invited issuers of Asset-Referenced Tokens (ARTs) and Electronic Money Tokens (EMTs) to contact their authorisation or supervisory teams as soon as possible if they plan to offer these tokens to the public or seek their admission to trading.11

The CBI has issued a Guidance Note12 on the Authorisation of Issuers of ARTs and EMTs, along with a Key Facts Document13 to help applicants understand the assessment process. This process includes multi-stage pre-application and application phases. For issuers of ARTs (who are not credit institutions), the application phase is expected to take at least six months. Submitting comprehensive and complete applications will benefit applicants by reducing the need for additional information requests from the CBI.

Issuers of EMTs must notify the CBI of their intention to offer EMTs to the public or seek their admission to trading at least 40 working days in advance. They must also submit their crypto-asset white paper to the CBI at least 20 working days before its publication, along with the information required by Article 109(4) of MiCAR. The Key Facts Document outlines the CBI’s expectations for applicants proposing to issue ARTs, providing detailed guidance on completing the document.

For context, in December 2023, the Department of Finance in Ireland published a Feedback Statement14 in response to a Consultation Paper15 on MiCAR. The Department decided to exercise a national discretion under Article 142(2) to address the MiCAR transition period. Ireland will shorten the transitional period for crypto-asset service providers (CASPs) to 12 months, ending in December 2025 instead of July 2026, for those operating under national law before 30 December 2024, following ESMA’s guidance. Ireland chose not to exercise its national discretions for:

  • Article 88(1): Public disclosure of inside information
  • Article 111(2): Administrative penalties and other administrative measures
  • Article 143(6): Simplified authorisation procedure

Virtual Asset Service Providers (VASPs) in Ireland have been required to register with the CBI for AML/CFT (Anti-Money Laundering/Countering the Financing of Terrorism) purposes and comply with ongoing AML/CFT obligations. The registration process also involves multi-stage pre-application and application phases, supported by the CBI’s Instruction VASP Manual and Guidance Note. As with ARTs and EMTs, comprehensive and high-quality applications will benefit the applicant.

 
Italy

In Italy, virtual asset service providers and issuers were obliged to enrol with OAM (Organism of Agents and Mediators) in accordance with anti-money laundering regulations. By Legislative Decree 129/2024 Italy confirmed that providers of services validly enrolled in the OAM register as of 27 December 2024 can benefit from a grandfathering period of 6 months. By 30 June 2025 providers of services must file a formal MiCA application, whether in Italy or in another Member State, to benefit from an additional 6 months period (until 30 December 2025). By 30 December 2025 authorities are obliged to grant or refuse authorizations.  

The Italian financial market authority (Consob) has created a specific webpage dealing with MICA with all relevant information for CASPs and issuers including specific templates to request the authorization for CASPs and to notify the provision of services on crypto assets by financial entities.

Consob and Bank of Italy are holding informal discussion table with applicants in view of the MiCA license submissions.

 

Luxembourg

CASP are subject to the authorisation regime involving prudential and organisational requirements in Luxembourg and are therefore subject to the supervision by the Luxembourg Supervision Commission of the Financial Sector (Commission de Surveillance du Secteur Financier – CSSF). Already regulated entities like banks and investment firms can provide certain services on crypto-assets upon simple notification. The CSSF invited any entities considering the notification or submission of an authorisation file for the provision of CASP services or the issuance of ART or EMT back in February 2024 to contact the CSSF in order to initiate a preliminary dialogue. A transitional period until 1 July 2026 was provided for CASP to adapt to the new requirements and secure such license from the CSSF.

Virtual assets service providers (VASP) that provided services prior to 30 December 2024, can continue to provide their services until 1 July 2026 or until they are granted or refused the CASP authorisation under MiCA by the CSSF. While the VASP license does not benefit from any passporting, the CASP license does. With this in mind, any VASP seeking to provide services in the EU would need to apply for a CASP license. Additionally, the draft law n°8387 amending the Luxembourg law of 12 November 2004 on the fight against money laundering and terrorist financing, as amended (AML Law) contemplates to repeal Luxembourg's national registration regime for VASP and introduce the transitional regime for CASP, ensuring the continuing compliance with the AML obligations during the transition of MiCA.

As of today, there is no CASP or ART registered with the CSSF, however, the CSSF lists one registered EMT and fifteen registered VASP.

 

Spain

In Spain, providers of exchange services between virtual currencies and fiat currencies and custodian wallet providers were already subject to registration requirements with the Bank of Spain in accordance with anti-money laundering regulations. The Spanish Securities Market Commission (CNMV) has confirmed that such registered providers will be able to benefit from the transition period until 30 December 2025. The register of the Bank of Spain will not disappear but will remain for information purposes only and no more individuals or legal entities will be able to register in it. Besides that, the CNMV has also confirmed that those individuals or entities that were not required to register with the Bank of Spain since they provided other services different from the above (e.g., portfolio management or investment advice on crypto assets) but that were effectively providing such services before the 30 December 2024 could benefit from the transition period until 30 December 2025 too. 

The CNMV has created a specific webpage dealing with MiCA with all relevant information for investors and CASPs including specific proformas to request the authorization for CASPs and to notify the provision of services on crypto assets by financial entities.

Since September 2024, the CNMV started to accept applications to be authorised as a CASP.

 

The Netherlands

In the Netherlands, the Authority for the Financial Markets (AFM) has a leading role in overseeing the crypto sector, including the CASPs licensing procedures and general supervision of CASPs, while De Nederlandsche Bank (DNB) is responsible for prudential supervision and the assessment of proposed qualifying holdings as well as the issuance of stablecoins such as ARTs and EMTs. Whitepapers will be reviewed by the AFM.

From 22 April 2024, CASPs were able submit license applications with the AFM. Granted licenses are effective since 30 December 2024 and are included in AFMs online register here. Currently, only four (4) CASPs are included in this register. Crypto companies already registered with DNB under the previous regime may make use of the transitional period and must obtain a CASP license by 30 June 2025.

 

United Kingdom

On 24 November 2024, the UK Financial Conduct Authority (the FCA) published a roadmap setting out its timeline to make cryptoassets a fully regulated asset by 2026 (the Roadmap).

The roadmap made clear that the process will begin with the publication of various discussion papers, consultations papers, policy statements and final rules, covering such matters as admission and disclosure rules, market abuse, trading platform rules, intermediation rules, lending rules, staking, prudential (capital and liquidity) requirements, custody, and regulation of stablecoin activities and services. This new regime is designed to sit alongside the existing cryptoassets anti-money laundering and financial promotions regime.

On 16 December 2024, the FCA published its first discussion paper on cryptoassets regulation since the publication of the RoadMap, which focuses on establishing an admissions and disclosures regime; and a cryptoassets market abuse regime (Cryptoassets DP). A discussion paper (DP23/4) on stablecoin regulation was published by the FCA in November 2023.

Please see our UK alert for further details.

The application of MiCA marks an important step in the future of markets in crypto-assets in the EU. Any planned issuer of crypto-assets and any crypto-asset service provider in scope of MiCA should carefully identify and analyse the operational and legal consequences, management options and approaches and potential operational change requirements.

For more information regarding MiCA and how this landmark EU legislation will affect your business, contact your usual DLA Piper advisor.

1Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (Text with EEA relevance), OJ L 150, 9 June 2023, p. 40–205.
2ESMA, Final Report, Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments, 17 December 2024, ESMA75453128700-1323.
3
1Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (Text with EEA relevance), OJ L 150, 9 June 2023, p. 40–205.
2ESMA, Final Report, Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments, 17 December 2024, ESMA75453128700-1323.
3Commission Implementing Regulation (EU) 2024/2984 of 29 November 2024 laying down implementing technical standards for the application of Regulation (EU) 2023/1114 of the European Parliament and of the Council with regard to forms, formats and templates for the crypto-asset white papers, OJ L, 2024/2984, 3 December 2024.
4Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (Text with EEA relevance), OJ L 267, 10 October 2009.
5ESMA, Final Report, Guidelines specifying Union standards on the maintenance of systems and security access protocols for offerors and persons seeking admission to trading of crypto-assets other than asset referenced tokens and e-money tokens, 17 December 2024, ESMA75-223375936-6089.
6ESMA, Final Report On the guidelines on reverse solicitation under the Markets in Crypto Assets Regulation (MiCA), 17 December 2024, ESMA35-1872330276-1899.
7Gesetz über die Digitalisierung des Finanzmarktes dated 27 December 2024, Federal Law Gazette BGB 2024 l I Nr. 438.
8Currently only published as draft version. Final wording and entry into force are still pending.
9BaFin Merkblatt Kryptowerte-Dienstleistungen nach MiCAR dated 3 January 2025.
10BaFin Merkblatt Zulassungsanforderungen bzgl. ART und EMT nach MiCAR dated 3 January 2025.
11Markets in Crypto Assets Regulation (MiCAR) | Central Bank of Ireland.
12Guidance Note for the Issuers of ARTs and EMTs.
13ART Key Facts Document.
14Public Consultation on the National Discretions contained in the Markets in Crypto Assets Regulation Feedback Statement 14 December 2023.
15Markets in Crypto Assets Regulation (EU 2023/1114) Public Consulta on 9 August 2023.