On 20 April 2023 EU Markets in Crypto Assets regulation (MiCA) was approved by the European Parliament, which will implement many new requirements for the crypto asset service providers (CASPs). As the date of application of MiCA is rapidly approaching, it is imperative that all concerned parties take the necessary steps to ensure MiCA compliance with the new regulatory framework.
Fintech Balance professionals have compiled an overview of the significant upcoming regulatory changes in the Lithuanian crypto market, which will take effect once MiCA is fully implemented (expected in the second half of 2024). While the requirements outlined by MiCA are more extensive than the examples presented in the table below, the selected examples offer a helpful overview of the organizational measures that businesses must put in place to ensure they are prepared to operate under the new regulatory framework.
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Lithuanian Legal Acts |
MiCA (from second half of the 2024) |
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Virtual asset service providers (VASPs) must have an authorized capital of at least EUR 125 000. |
The minimum capital requirements for crypto-asset service providers range from EUR 50,000 to EUR 150,000, depending on the type of service provided (classified as Class 1-3). For example, a crypto assets wallet operator (Class 2) must have an authorized capital of at least EUR 125,000, while a crypto asset exchange platform operator (Class 3) must have a minimum authorized capital of EUR 150,000. |
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Reputational requirements for key persons of management as well as shareholders |
The management body of the applicant crypto-asset service provider, as well as any natural persons who hold 20% or more of the share capital or voting rights, must have an impeccable reputation (meaning no violations of criminal or other laws, etc.). Additionally, proof must be provided that the natural persons involved in the management body possess adequate knowledge, skills, and experience to manage the provider and will dedicate sufficient time to performing their duties. |
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Virtual asset service providers are included in the local public list of authorized subjects |
EU Authorities will be responsible for creating a register of all EU-based crypto-asset service providers (CASPs), which will be available to the public and will be regularly updated. |
Additional requirements for crypto asset service providers (CASPs), which shall be established in MiCA regulation:
- Safeguarding of clients’ funds – crypto-asset service providers (CASPs) must promptly deposit any client funds with a central bank or credit institution. It shall be also ensured that the clients’ funds are held in a separate account or accounts, which can be easily distinguished from those used by the service provider to hold their own funds.
- Recording requirements – crypto-asset service providers (CASPs) are required to maintain records of all crypto-asset services, orders, and transactions that they carry out.
- Internal policies – crypto-asset service providers (CASPs) are required to prepare additional policies that include a clear and comprehensive description of the applicant’s IT systems and security arrangements, in both technical and non-technical language. They must also provide a detailed account of the procedure and system in place to detect market abuse and ensure the segregation of clients’ crypto-assets and funds.
- Outsourcing requirements – crypto-asset service providers (CASPs) shall ensure business continuity, by complying with outsourcing requirements that include contingency plans, policies, and exit strategies.
- Soft regulation – Crypto-asset service providers (CASPs) have an obligation to provide their clients with accurate, clear, and non-misleading information, especially in marketing communications, etc.
With the deadline for the application of MiCA approaching, it is essential that all CASPs take the necessary steps to comply with the new regulatory framework. These steps include obtaining the required licenses or providing necessary notifications, preparing and revising policies, as well as revising arrangements with external providers in accordance with the new regulations and procedures.
Our team is well-equipped to help prepare your business operations for full compliance with the new regulatory standards established by MiCA.
Please do not hesitate to contact us for further information and assistance @ Fintech Balance.