With the Markets in Crypto-Assets Regulation (MiCA) set to take effect across the European Union on December 30, 2024, the crypto landscape is bracing for substantial change. MiCA introduces stringent regulatory requirements, from minimum capital thresholds to market abuse and IT security (DORA) provisions. For Virtual Asset Service Providers (VASPs), these new standards could mean the difference between thriving and deregistration.

In Lithuania alone, over 340 VASPs have already lost their registrations due to non-compliance with MiCA’s capital requirements, and similar scenarios may unfold across the EU. MiCA aims to create a more transparent and regulated crypto ecosystem, but the transition will look different across member states due to varying “grandfathering” periods. Some countries allow an 18-month transition, while others offer no grace period.

For crypto companies, understanding these differences - and knowing where to find help - is critical to staying compliant.

Uneven MiCA Implementation: A Breakdown

MiCA was developed to standardise crypto regulations across the EU, but individual member states have flexibility in how quickly they implement the new rules. Here’s a look at how some countries are approaching the transition:

• Austria, Denmark, Slovenia: No grandfathering period, meaning MiCA applies in full from day one. Crypto companies here must meet MiCA requirements immediately or risk losing their VASP registrations.
• Belgium, Bulgaria, Czech Republic, Croatia, Luxembourg, Malta: These countries offer an 18-month grandfathering period, giving VASPs additional time to meet MiCA’s requirements.

The variation in implementation timelines creates unique challenges and opportunities for VASPs across the EU. If you’re in a country with a short or non-existent transition period and concerned about compliance, relocation to a country with a longer grandfathering period might provide extra time to align with MiCA standards.

Key Challenges Under MiCA

Beyond capital requirements, MiCA introduces complex compliance requirements including DORA and Travel Rule that may require major operational overhauls. ESMA has emphasised the importance of a swift, standardised transition across the EU, recommending that all countries adopt a grandfathering period of no more than 12 months. While longer transition periods may offer relief, it’s crucial for VASPs to prepare for full compliance sooner rather than later.

Additional Challenges VASPs May Face:

• Increased Capital Requirements: For example, MiCA mandates that crypto custodians hold a minimum of €125,000 in capital. This threshold may be challenging for smaller or emerging VASPs.
• Digital Operational Resilience (DORA): DORA applies specifically to CASPs under MiCA, setting standards for cybersecurity and operational resilience. This regulation requires CASPs to establish frameworks that ensure resilience against digital disruptions, which may demand investment in advanced cybersecurity measures and operational risk management systems

Finding the Right Help to Navigate MiCA

Preparing for MiCA may seem daunting, especially for smaller companies. Fortunately, resources are available to help VASPs comply effectively.

Januar offers a free, curated list of crypto-specialised lawyers by country. These legal advisors can guide VASPs company creation, and registering as well as through capital, licensing, and overall compliance with MiCA standards. Additionally, Januar provides international bank account numbers (IBANs) tailored for crypto companies, making it easier to manage international transactions and capital needs - a critical feature in the MiCA era.

What VASPs Need to Consider Moving Forward

For crypto companies, MiCA represents both a challenge and a chance to build trust and credibility within the EU’s regulated financial system. But the path to compliance is steep, and acting now is essential.

• Evaluate Your Compliance Readiness: If you’re in a country with a zero or short grandfathering period, start assessing compliance gaps immediately.
• Consider Relocation: Moving to a country with a longer transition period might buy your company more time to align with MiCA’s standards, especially for capital, governance and IT security requirements.
• Engage a Crypto-Friendly Legal Advisor: Having a knowledgeable advisor in your country who understands MiCA can streamline your compliance journey. Januar’s Advisor Directory is a great place to start.

Preparing for the Future of EU Crypto Regulation

MiCA is a signal that the EU is serious about standardising and regulating the crypto industry. While this regulation may initially seem restrictive, the framework it creates could help legitimise and expand the market by fostering greater transparency and accountability. For VASPs, preparing now is key to thriving under MiCA.

Key Takeaways:

• MiCA’s new regulatory requirements could lead to further deregistrations in the EU.
• Countries vary in their approach to MiCA’s implementation, with some offering longer transition periods.

Resources like Januar’s crypto-specialist lawyer directory and IBAN services can provide crucial support.

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Disclaimer
The information provided in this article is intended solely for general informational purposes and should not be interpreted as professional advice from Januar. Please be aware that Januar is not a financial advisor. We strongly recommend that individuals seek independent guidance from qualified legal, financial, or accounting professionals before making any cryptocurrency investment decisions.