Dear Readers 📚 , 

As of late, we had inquiries from market participants about the best authorization for VASP/CASP Services in the EU (virtual asset service provider authorizations). Some still think it is Lithuania (even though Lithuania has increased the capital to 125k EUR some time ago), some apply in Poland, some in Italy. 

In general, it is worth remembering that MiCA (Markets in Crypto-Assets regulation in Europe similar to MIDIF II and PSDII intended to harmonize applicable to VASP laws in Europe) is already in the vicinity.  

What does this mean❓

It means that all current local authorizations will cease to exist in their current state this year, or latest – next year, and all EU member states would need to introduce the minimum set of requirements for such authorizations to be in line with the MICA requirements. 

Yes, but what does this mean in practice❓

It means that even if you have, or you are currently applying for a local authorization from any member state of the EU, the local authority will change the requirements sooner or later (by increasing them) to meet what MICA requires. There will be 2 scenarios: 

1️⃣ Current authorizations will be cancelled, and the companies would need to apply for new ones; or 

2️⃣ Currently authorized companies will have a period of xx months to do several things for their current companies to meet the requirements, and therefore be able to convert the old authorization into a new one. 

As a rule of thumb those jurisdictions that have strict rules (Netherlands for example) will most likely follow path of the option 2, where less strict jurisdictions (as of now) , for example Poland, would most likely follow option 1.  

Just as a general example, Estonia was a favorite hub of VASPs for an extended period of time. Then a requirement for capital, local director & and compliance officer were introduced. Estonia hasn’t yet finalized the requirements locally for MICA, but what is known is that the number of local staff required will dramatically increase (a board of directors is to be introduced where the majority should be local) and the regulator will change from FIU to FSA (the latter is overseeing the operations of financial companies in the country). 

If you want to learn more about EU VASP and MICA, contact our team and have a great day ahead!