MiCA Regulation – CASP license in EU

For a CASP license application we will begin with a concentrated legal opinion on the business model, shareholding structure, policy documentation and AML compliance systems. We can thereafter prepare a plan and handle all aspects of the licensing process. Below we have noted some selected important requirements for the license application documentation.

• Programme of Operations: sets out the types of crypto-asset services that the applicant wishes to provide, including where and how these services are to be marketed. It entails a three-year plan for regulated and unregulated activities, geographical distribution of services, and target client categories. It also covers the outsourcing policy, including intra-group arrangements, a list of outsourced service providers, a financial forecast, and plans for exchanges and activities.

• Business continuity policy: disaster recovery plan, internal control mechanisms and effective procedures for risk assessment, systems and procedures to safeguard the security, integrity and confidentiality of information. CASPs must also have in place systems and procedures to monitor and detect market abuse. There are also requirements for outsourcing and to maintain and to operate an effective policy to prevent, identify, manage and disclose conflicts of interest.

• CASPs will be required to have adequate measures in place to safeguard the assets of their clients, especially in case of insolvency and to prevent the use of a client’s assets on their own account. Client’s funds should be placed with an EU credit institution and steps taken to ensure that the client funds are held in separate accounts. Additionally, CASPs will need to confirm that they have adequate insurance coverage to protect their clients in case of theft or loss of assets.

Below we have covered the main list of required documentation, policies and rules (referring to Article 62 of MiCA) which have to be tailor-made for each applicant for the CASP license. We can handle all aspects of the licensing process, ensuring a smooth and efficient application experience.

1. Programme of Operations -Article 62(2)(d) of MiCA
2. Insurance Policy
3. ICT Systems Security Policy
4. Market Abuse Monitoring and Reporting Policy
5. Client Crypto-Asset Safeguarding Policy
6. Client Complaint Handling Policy
7. Conflict of Interest Policy
8. The Outsourcing Management Policy
9. Custody Policy
10. Trading Platform Operating Rules
11. Non-Discriminatory Commercial Policy
12. Order Execution Policy (if applicable)
13. Governance Arrangements
14. Internal Control Policy
15. Business Continuity Policy
16. IT Systems and Security Arrangements Policy
17. Proof of Meeting Prudential Safeguards Documentation Policy
18. Client’s Crypto-Assets and Funds Segregation Procedures Policy
19. Subsidiary Relationship Information Documentation
20. Compliance Assessment Documentation
21. Cross-Border Service Provision Information Documentation
22. Notification of Cross-Border Activities Documentation
23. AML Policy
24. Whistleblowing Policy

For the full MiCA regulation please refer to Regulation (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)

The MiCA CASP license may be terminated by the regulator in several cases, excluding any regulatory deficiencies, also in case licensed activities have not started within 12 months of obtaining the license or if crypto-asset services have not been provided in a period of 9 months.

MiCA also establishes financial penalty  thresholds, from 3% up to 12.5% of the total annual turnover of the entity or more, periodic penalty payments, withdrawal/suspension of the license or removal/ban of a person from the managerial positions.