What Is MiCA and Who Does It Apply To?

Legal Nodes' comprehensive guide breaks down MiCA into actionable insights for businesses operating in the crypto space. The regulation applies to any entity offering crypto-asset services to EU residents, regardless of where that entity is incorporated.

MiCA creates a unified regulatory framework replacing the previous patchwork of 27 different national approaches. For crypto businesses, this means one license can unlock access to the entire European Economic Area—but it also means meeting a comprehensive set of operational, capital, and compliance requirements.

What Does MiCA Cover?

The regulation establishes rules for three main areas:

Crypto-Asset Issuance

• Whitepaper requirements for public offerings
• Marketing communications standards
• Liability for misleading information
• Special rules for stablecoins (ARTs and EMTs)

Crypto-Asset Service Providers (CASPs)

• Authorization and licensing requirements
• Prudential requirements (capital, insurance)
• Organizational requirements (governance, conflicts of interest)
• Conduct of business rules

Market Integrity

• Market abuse prevention
• Insider trading prohibitions
• Disclosure obligations
• Supervisory cooperation mechanisms

How Does CASP Licensing Work Under MiCA?

Legal Nodes identifies ten distinct crypto-asset services requiring authorization:

Core Services

• Custody and administration: Safeguarding crypto-assets on behalf of clients
• Trading platform operation: Running exchanges or matching platforms
• Exchange services: Crypto-to-fiat and crypto-to-crypto conversions
• Order execution: Executing client orders on their behalf

Advisory and Management Services

• Order placement: Transmitting orders to trading venues
• Order reception: Receiving and transmitting client instructions
• Advisory services: Personalized crypto-asset recommendations
• Portfolio management: Discretionary management of client portfolios

Additional Services

• Transfer services: Moving crypto-assets between addresses
• Crypto-asset placing: Underwriting or placing for issuers

Licensing Requirements

• Legal entity established in an EU member state
• Fit and proper management (competence, reputation, no conflicts)
• Minimum capital requirements (€50,000 to €150,000 depending on service)
• Professional indemnity insurance or equivalent coverage
• Robust governance and internal control mechanisms

What Are MiCA's Stablecoin Requirements?

The guide emphasizes the distinct treatment of two stablecoin categories:

E-Money Tokens (EMTs)

• Reference a single fiat currency
• Must be issued by authorized credit institutions or e-money institutions
• Subject to Electronic Money Directive requirements
• Holders have right to redeem at par value at any time
• No interest payments allowed

Asset-Referenced Tokens (ARTs)

• Reference multiple currencies, commodities, or other assets
• Require authorization from national competent authority
• Minimum own funds of €350,000 or 2% of reserve assets
• Detailed whitepaper with EBA-compliant content
• Reserve asset custody and management requirements

Key Operational Requirements

• Clear redemption policies and procedures
• Segregated reserve assets
• Regular independent audits
• Consumer complaint handling mechanisms
• Business continuity and wind-down planning

What Is the MiCA Implementation Timeline?

Legal Nodes outlines the phased implementation approach:

Phase 1: Stablecoin Provisions (June 2024)

• Title III (Asset-Referenced Tokens) in effect
• Title IV (E-Money Tokens) in effect
• ART and EMT issuers must be fully compliant
• Transition provisions for existing stablecoin issuers

Phase 2: Full Application (December 2024)

• All MiCA provisions fully applicable
• CASP licensing requirements in effect
• Market abuse provisions active
• Cross-border passporting operational

Grandfathering Provisions

• Existing nationally-licensed CASPs may continue operations
• Up to 18-month transition period (member state discretion)
• Must apply for MiCA authorization before grandfathering expires
• Cannot rely on grandfathering for new services or markets

How Should Companies Choose Their Licensing Jurisdiction?

Legal Nodes highlights factors for jurisdiction selection:

Key Considerations

• Regulatory expertise: Experience of local regulators with crypto
• Processing time: Expected authorization timeline
• Substance requirements: Local office, staff, director requirements
• Banking access: Availability of crypto-friendly banking partners
• Tax treatment: Corporate tax rates and incentives

Popular Jurisdictions

• Lithuania: Streamlined process, English-speaking regulators
• France: Large market, established framework
• Germany: Major economy, sophisticated regime
• Ireland: English-speaking, EU gateway
• Netherlands: Pragmatic approach, strong infrastructure

What Should Financial Institutions Consider?

Compliance Infrastructure

• AML/CFT programs meeting EU 6th Anti-Money Laundering Directive
• Travel Rule compliance for crypto transfers
• Transaction monitoring and sanctions screening
• Record-keeping requirements (5+ years)

Operational Requirements

• Segregated client asset arrangements
• Business continuity and disaster recovery
• Complaints handling procedures
• Outsourcing governance framework

Governance Standards

• Board-level crypto expertise
• Conflict of interest management
• Internal audit function
• Compliance monitoring program