EU Drops the Hammer: MiCA Crypto Regulations Now in Full Force in 2025

Do you have or use crypto? Are you providing crypto services? If so, in 2025, you need to be very careful, especially if you or your clients or investors are from the European Union.

TLDR

As of January 2025, all crypto-asset service providers will need to begin applying for licenses to operate under MiCA in EU.

MiCA Latest Version

On December 30, 2024, the EU Crypto Regulation known as MiCA came into full effect. The full text of the latest version of MiCA can be found here:

• https://www.eurlexa.com/act/en/32023R1114/present/text

Recent Changes

Interestingly, this is already the second version of MiCA. The initial text can be found here.

The main changes are:

• The EU Commission has been given the power to supplement MiCA by adopting regulatory technical standards in certain areas.
• Issuers, offerors, or persons seeking admission to trading are required to submit inside information to the European Single Access Point (expected to operate from 2030).

You can view the specific updates in detail with track changes mode here.

Objectives of MiCA

MiCA is a comprehensive framework designed to regulate crypto assets across the EU.

• Unified Regulatory Framework: MiCA establishes a single set of rules applicable to all 27 EU member states, replacing the fragmented regulatory landscape that previously existed. So far, so good — you won’t need to study crypto rules for each individual EU member state.
• Consumer Protection: MiCA introduces consumer protection measures, including transparency requirements for issuers of crypto-assets, and obligations for crypto-asset service providers (CASPs) to clearly communicate the risks associated with crypto investments. Given the many unfortunate stories from crypto customers, these protective measures are a much-needed step.
• Market Integrity: MiCA aims to strengthen confidence in crypto markets by prohibiting market manipulation and insider trading. This is a fair addition, similar to regulations in traditional capital markets.

Key Provisions

Now comes the tricky part for crypto in the EU.

• Licensing Requirements: All CASPs must obtain authorization from national competent authorities to operate within the EU. This includes having at least one director based in the EU and maintaining a registered office there. Competent authorities are typically financial market regulators, not IT experts, making it difficult to predict how stringent the rulings will be. It’s also possible that we may see "licence shopping" — CASPs choosing the most favorable EU regulator. More details on application are here https://www.eurlexa.com/act/en/32023R1114/present/text#Article-62-Application-for-authorisation-as-a-crypto-asset-service-provider
• Regulatory Oversight: The European Securities and Markets Authority (ESMA) will oversee significant CASPs — those with more than 15 million active users.
• Issuers' Obligations: Issuers of asset-referenced tokens (ARTs) and electronic money tokens (EMTs) must prepare detailed whitepapers outlining their offerings, including risks and terms of investment. More details here https://www.eurlexa.com/act/en/32023R1114/present/text#Article-6-Content-and-form-of-the-crypto-asset-white-paper
• Anti-Money Laundering (AML): All CASPs are required to implement strong AML policies to ensure compliance with EU financial service standards. This was, of course, expected, especially in light of sanctions imposed on Russia.

Licensing and Transitional Period

As of January 1, 2025, all CASPs will need to begin applying for licenses to operate under MiCA in EU. Here are the key details regarding the transitional provisions and licensing process:

• Transitional Period: Existing virtual asset service providers (VASPs) — the more commonly used term outside the EU for crypto providers — can continue to operate under their current national licenses until December 31, 2025. In some countries, this transitional period may be extended until July 1, 2026. This allows VASPs time to apply for a MiCA CASP license while still providing services legally.
• License Application Submission: From January 1, 2025, companies must submit their applications for a MiCA CASP license. However, they could have begun preparing and submitting applications as early as April 22, 2024, for pre-examination by local authorities, although formal authorization cannot be granted until MiCA comes into effect on December 30, 2024.
• Application Process: Submitting a license application is necessary but not sufficient on its own. The application must be complete and meet all regulatory requirements. The review process typically takes around 40 working days, but it can take longer if additional information is requested or if the application is complex.
• Continued Operation During Application: While existing VASPs can operate under their current licenses during the transition period, they must ensure that they submit their CASP license applications before the end of this period to avoid interruptions in service.

In summary, existing providers have until the end of 2025 to transition to a MiCA CASP license while continuing their operations, provided they apply for the new license in a timely manner.

Implementing Regulations

Welcome to the EU bureaucracy! Below is a comprehensive list of all EU regulations that supplement or implement MiCA:

• Commission Delegated Regulation (EU) 2024/1503 of 22 February 2024 supplementing Regulation (EU) 2023/1114 of the European Parliament and of the Council by specifying the fees charged by the European Banking Authority to issuers of significant asset-referenced tokens and issuers of significant e-money tokens
• Commission Delegated Regulation (EU) 2024/1504 of 22 February 2024 supplementing Regulation (EU) 2023/1114 of the European Parliament and of the Council by specifying the procedural rules for the exercise of the power to impose fines or periodic penalty payments by the European Banking Authority on issuers of significant asset-referenced tokens and issuers of significant e-money tokens
• Commission Delegated Regulation (EU) 2024/1506 of 22 February 2024 supplementing Regulation (EU) 2023/1114 of the European Parliament and of the Council by specifying certain criteria for classifying asset-referenced tokens and e-money tokens as significant
• Commission Delegated Regulation (EU) 2024/1507 of 22 February 2024 supplementing Regulation (EU) 2023/1114 of the European Parliament and of the Council by specifying the criteria and factors to be taken into account by the European Securities Markets Authority, the European Banking Authority and competent authorities in relation to their intervention powers
• Commission Implementing Regulation (EU) 2024/2494 of 24 September 2024 laying down implementing technical standards for the application of Regulation (EU) 2023/1114 of the European Parliament and of the Council with regard to standard forms, templates and procedures for the cooperation and exchange of information between competent authorities and EBA and ESMA
• Commission Implementing Regulation (EU) 2024/2545 of 24 September 2024 laying down implementing technical standards for the application of Regulation (EU) 2023/1114 of the European Parliament and of the Council with regard to standard forms, templates and procedures for the cooperation and exchange of information between competent authorities
• Commission Implementing Regulation (EU) 2024/2861 of 12 November 2024 laying down implementing technical standards for the application of Regulation (EU) 2023/1114 of the European Parliament and of the Council with regard to the technical means for the appropriate public disclosure of inside information and for delaying the public disclosure of that information
• Commission Implementing Regulation (EU) 2024/2902 of 20 November 2024 laying down implementing technical standards for the application of Regulation (EU) 2023/1114 of the European Parliament and of the Council with regard to reporting related to asset-referenced tokens and to e-money tokens denominated in a currency that is not an official currency of a Member State
• Commission Implementing Regulation (EU) 2024/2984 of 29 November 2024 laying down implementing technical standards for the application of Regulation (EU) 2023/1114 of the European Parliament and of the Council with regard to forms, formats and templates for the crypto-asset white papers

Conclusion

In summary, MiCA aims to create one transparent environment for crypto assets within the EU. As the regulation comes into full effect in 2025, it will significantly shape how crypto-asset service providers operate in Europe, hopefully fostering innovation while ensuring accountability within the market.

Disclosure: I am a member of eurlexa team. On Eurlexa you can access and search EU regulations and directives with ease. Eurlexa is a mobile-optimized, user-friendly alternative to EU offical and rather cumbersome EUR-Lex.