CASP regulation according to the MICA

The Markets in Crypto-Assets Regulation (MiCA) is a legal base for issuing, intermediating, and dealing in crypto-assets in EU countries.

According to the MiCA, Crypto-asset service providers must be authorized, comply with conduct, disclosure, governance, and organizational requirements, and have prudential safeguards. 

Crypto-asset service providers that provided their services by applicable law before 30 December 2024, can carry out such activities until 1 July 2026 or until they receive authorization or receive the refusal according to Article 63 of MiCA. 

Member States may decide not to apply the transitional regime for crypto-asset service providers or to reduce its duration where they consider that their national regulatory framework applicable before 30 December 2024 is less strict than MiCA.

By 30 June 2024, Member States had notified the Commission and ESMA whether they had exercised the mentoined option and the duration of the transitional regime - https://www.esma.europa.eu/sites/default/files/2024-12/List_of_MiCA_grandfathering_periods_art._143_3.pdf.

Under MiCA, crypto-asset service providers - legal persons or organizations provide professional crypto-asset services according to the provided authorization to operate in the EU. 

The list of services which can be provided by the CASP:

• crypto-asset service’ means any of the following services and activities relating to any crypto-asset:
• providing custody and administration of crypto-assets on behalf of clients;
• operation of a trading platform for crypto-assets;
• exchange of crypto-assets for funds;
• exchange of crypto-assets for other crypto-assets;
• execution of orders for crypto-assets on behalf of clients;
• placing of crypto-assets;
• reception and transmission of orders for crypto-assets on behalf of clients;
• providing advice on crypto-assets;
• providing portfolio management on crypto-assets;
• providing transfer services for crypto-assets on behalf of clients. 

Below are the basic requirements for the CASPs.

Governance requirements

Each CASP needs to ensure the execution of those available in MICA the proper requirements applicable to the management body, personnel, and shareholders of CASPs.

Each CASP needs to ensure the adequate internal policies and procedures to ensure a sufficient level of compliance.

Each CASP needs to ensure the execution of the reporting requirements.

Recovery plan’s requirements

Each CASP needs to provide continuity and regularity in the performance of their services.

Each CASP needs to minimize the risks stemming from inter alia the use of a network.

Each CASP needs to implement the backup, response, and recovery plan.

Record-keeping requirements

CASPs are required to keep records of all crypto-asset services, activities, orders, and transactions that they carry out.

The reduction of the prevalence of outsourced services 

Each CASP needs to minimize the risks associated with the using of third-party service providers.

Other requirements

Each CASP needs to act in the best interests of the client's requirements.

Each CASP should provide clear and not misleading information to the clients.

Policy on pricing, costs, and fees should be publicly available in a prominent place on its website along with information on the climate-related impact of the crypto-assets.

Each CASP should warn its clients of the various risks that may occur.

Each CASP should implement and maintain effective policies and procedures to identify, prevent, manage, and disclose conflicts of interest.

Each CASP should establish complaint-handling procedures and make them publicly available.

Each CASP that holds crypto-assets belonging to a client or the means of access to such crypto-assets, is under the obligation to safeguard the client’s ownership rights, especially in the case of the CASP’s insolvency.  

Each CASP that holds crypto-assets belonging to a client should apply any measures for adequate protection and notify the client when there are potential threats.

Accordingly, it is possible to expect the creation of a single, professional, decentralized system of the crypto asset service providers.

With respect to the general European legal framework, CASPs are primarily required to act in a fair and transparent manner in order to ensure the best possible result for their clients while executing their orders.