MiCAR under the microscope - Part 4: The CASP licensing regime

In this fourth instalment, we explore the implications of the future regulatory status of crypto-asset service providers (CASPs). We explain the scope of the activities CASPs may carry out, the main steps of the authorization and passporting process and procedures, and what the phase-in regime entities that already performed crypto-asset services prior to the entry into force of MiCAR may benefit from.

According to MiCAR, a CASP is a legal person or other undertaking that provides one or more crypto-asset services to clients on a professional basis and that is allowed to do so by the relevant authorities. The crypto-asset services covered by MiCAR include, among others, the: custody, trading, exchange, advice, and portfolio management of crypto-assets.

To become authorized as a CASP, MiCAR provides two separate regimes:

1. a full authorization process for previously unregulated entities; and
2. a lighter, top-up license for those entities already subject to regulatory and prudential supervision.

Once authorized, a CASP will enjoy passporting rights, which will allow it to offer the services covered by its license throughout the European Union, subject to notifying its home Member State authority. Third-country CASPs will be able to rely on a reverse solicitation exemption and therefore avoid the need to obtain a license altogether, subject to certain restrictions.

To assist CASPs that were already active in the market to adapt to the new licensing and organisational/operational requirements, MiCAR provides for a transitional regime. These CASPs may continue to offer their services until 1 July 2026, or until they are authorized under MICAR, whichever comes first. How this operates in reality, however, will be up to the national regulators, who can opt out of this transitional period entirely, or alternatively reduce it in certain circumstances.

For more detail, read “MiCAR under the microscope - Part 4: The CASP licensing regime”.