Licensing changes with MiCA: the key elements to remember

MiCA for new companies: what will be required?

All new companies that are either CASPs or Issuers of crypto-assets (CAs) fall under the scope of MiCA, which means that new licensing requirements apply to them now that the regulation came into force.

Assess the right level of licensing

First and foremost, it is important to properly define the right level of licensing depending on the token types the company plans to issue or offer trading and other services with. All services under the MiCA framework will be divided into services with EMTs (e-money tokens) and ARTs (asset-references tokens). You can find out more about both in our recent blog post on the token classification under MiCA.

Companies engaged in any activities involving these token types must evaluate and adjust their business models to comply with the MiCA regulation. This must be done with consideration that only credit and electronic money (EMI) institutions will have the right to issue EMTs under MiCA.

Issuers of crypto-assets (CAs) are defined by MiCA as companies that issue crypto-assets not classified as securities or financial instruments. This means that your project might require some legal evaluation to ensure that the tokens it offers cannot be deemed as either of those. In case a company creates a new type of cryptocurrency, it must comply with the MiCA regulation unless the crypto-asset is considered a traditional security or a financial instrument.

Acknowledge the requirements

Before beginning the registration of a crypto company in Europe, the next important step is to acknowledge the licensing requirements. It is key to act in synergy with these requirements in order to obtain a legal permit without complications.

It is not as difficult as it might seem: even though there are more requirements now, they all aim to make the licensing process more streamlined and equal for everyone. Some of the key requirements will include:

• Office with an EU address;

• Business plan and a program of operations;

• For CAs: a legal opinion as proof that the issued ARTs do not classify as EMTs or other assets excluded from the scope of MiCA;

• Identity documents and certificates of non-criminal record (including absence of sanctions in regards to any professional committees and of sanctions/penalties of civil law character) of all key members;

• CA white paper with general information on the project;

• Description of contracts with third parties;

• Business continuity policy, internal control mechanisms, and risk management procedures;

• Data protection measures;

• Complaint-handling procedure.

Proper preparation of the project’s whitepaper

One of the primary new elements introduced by MiCAR is an obligatory white paper for all license applicants. The white paper must contain general information on the project, its offeror, raised capital, rights and obligations attached to provided services, underlying technology, and the risks related to running the business.

Along with a white paper, each applicant must submit a legal opinion defining the types of tokens the company is going to issue and proving that they do not classify as any other token types (ARTs do not classify as EMTs or other types excluded from MiCA).

Both of these documents require the diligence and precision of an experienced lawyer; we strongly advise you to reach out for Rengang’s assistance while preparing your project for licensing under MiCA.