Navigating CASP License in Europe

For crypto businesses aiming to align with European Union standards, securing a CASP (Crypto-Asset Service Provider) license in Poland is essential. Our guide, tailored to the MiCA regulation, outlines the critical steps to ensure your business meets EU compliance requirements effectively. Here they are:

A CASP crypto license may be granted for any number of services within the crypto industry, including:

• Providing custody and administration of crypto assets on behalf of clients—the service entails the management of your crypto. The company will be responsible for the safekeeping or control of crypto-assets (or the means of access) to such crypto-assets on behalf of its clients, where applicable, in the form of private cryptographic keys.
• Operation of a trading platform for crypto-assets, which involves the management of one or more multilateral systems that bring together or facilitate the bringing together of multiple third-party purchasing and selling interests in crypto-assets in the system and in accordance with its rules. This will result in a contract, either through the exchange of crypto-assets for funds or the exchange of crypto-assets for other crypto-assets.
• Exchange of crypto-assets for funds—service consists of concluding purchase or sale contracts concerning crypto-assets with clients for funds by using proprietary capital.
• Exchange of crypto-assets for other crypto-assets—service consists of concluding purchase or sale contracts concerning crypto-assets with clients for other crypto-assets by using proprietary capital.
• Execution of orders for crypto-assets on behalf of clients means the conclusion of agreements, on behalf of clients, to purchase or sell one or more crypto-assets or the subscription on behalf of clients for one or more crypto-assets, and includes the conclusion of contracts to sell crypto-assets at the moment of their offer to the public or admission to trading.
• Placing of crypto-assets means the marketing, on behalf of or for the account of the offer or a party related to the offer or of crypto-assets to purchasers.
• Reception and transmission of orders for crypto-assets on behalf of clients means the reception from a person of an order to purchase or sell one or more crypto-assets or to subscribe for one or more crypto-assets and the transmission of that order to a third party for execution.
• Providing advice on crypto-assets means offering, giving, or agreeing to give personalized recommendations to a client, either at the client’s request or on the initiative of the crypto-asset service provider.
• Offering guidance regarding one or more transactions concerning crypto-assets or the utilization of crypto-asset services.
• Portfolio management on crypto-assets refers to the discretionary management of portfolios on a client-by-client basis in accordance with the mandates provided by clients, where such portfolios contain one or more crypto-assets.
• Transfer services for crypto-assets on behalf of clients refer to the transfer of crypto-assets from one distributed ledger address or account to another on behalf of a natural or legal person.

The extent of services that can be acquired during the crypto licensing process is contingent upon the business model of your organization. The capital requirements that your company will need to satisfy are directly influenced by the scope of services that are provided.

The following entities will be permitted to offer cryptocurrency services under MiCA:

• a credit institution,
• central securities’ depository,
• investment firm,
• market operator,
• electronic money institution,
• UCITS management company, or an alternative investment fund manager that is permitted to provide crypto-asset services pursuant to Article 60 of MiCA,
• companies that have been granted a CASP license under art. 63 MiCA [in practice, in Poland, that would be a limited liability company (spółka z ograniczoną odpowiedzialnością) or join-stock company (spółka akcyjna)]—hereinafter commonly referred to as “Authorized CASPs”

CASP registrants are required to adhere to the following (Article 63 of MiCA):

• The company must be headquartered in the Member State in which it conducts at least a portion of its crypto services activities.
• Have a management board that is located in the EU, and at least one of the directors must be a resident of the EU.
• Additionally, the company must meet the minimum capital requirements.
• Provide the internal documentation required by MiCA.
• Have a management board of good repute and a clean criminal record.
• Possess the necessary knowledge, skills, and experience to fulfill its responsibilities in the crypto market, both individually and collectively.

When will the MiCA regulation be implemented in Poland?

On December 30, 2024, MiCA has been implemented for CASPs. Entities that have not participated in cryptocurrency activities prior to that date are required to submit an application for a CASP license prior to commencing operations. Since the regulation policies in Poland have not been completed on time in accordance with Article 150 of the draft Polish crypto-assets Act, this date has been established for Polish entities as June 30, 2025.

Simultaneously, entities currently listed in the VASP register may operate the services listed in the VASP register until the proceedings are concluded, provided that they submit a complete application for a CASP license before 1 May 2025 and receive affirmation of the application’s completeness.

This implies that entities listed in the VASP register that submit an application for a CASP license before May 1, 2025, may continue to operate in an old operational capacity beyond June 30, 2025. The timeframes provided are not definitive, as the legislation is still in the process of being enacted. Consequently, in the opinion of the Director of the Tax Administration Chamber in Katowice, from December 30, 2024, it is not possible to enter new entities into the Register of Virtual Currency Activities.

During the grace period, which is estimated to last until June 30, 2025, the current 1841 VASPs (entities registered in the Register of virtual currency activities in Poland) will be permitted to offer services under the VASP license unless, of course, the application for CASP has been submitted, and then the grace period is extended until the license has been granted or not with the grace period extended until September 30th, 2025. The timeframes provided are not definitive, as the legislation is still in the process of being enacted, but it is very probable.

Steps to Obtain a CASP License:

Preparation and Documentation:
Our consultants start by conducting a thorough assessment of your business model. Ensure that your operational protocols, risk management strategies, and client asset protections align with the MiCA regulations. Detailed documentation is crucial for proving compliance during the application process.

Engage with Regulatory Experts:

Consulting with legal specialists in EU crypto regulations can greatly enhance your understanding and navigation of the application process. Our legal team of partners can provide invaluable insights into the complexities of compliance and help tailor your submission to meet regulatory expectations.

Strengthen Your Infrastructure:

It’s important to establish a robust operational framework that supports not only regulatory requirements but also the security and efficiency of your services. This includes both physical and digital infrastructures that are resilient and secure.

Submission and Follow-Up:

Once your documentation is in order and your systems are prepared, our experts will submit your application. They will stay proactive in following up with the regulatory body to address any queries or requirements they might have.

What documents can we do for you?

We assist in preparing the comprehensive documentation required for obtaining an EU MiCA CASP license. Except for our consulting services, our partners will provide you with comprehensive services, including drafting the necessary legal documents, such as:

• A detailed business plan.
• Proof of compliance with MiCA’s prudential safeguards (Article 67).
• Description of governance arrangements.
• Documentation of the management body’s repute, knowledge, skills, and experience.
• Information on shareholders and their holdings, including proof of good repute.
• Description of internal controls, risk management (AML/CFT), and business continuity plan.
• Technical documentation of ICT systems and security.
• Description of client asset and fund segregation procedures.
• Complaints-handling procedures.
• Crypto custody and administration policy.
• Trading platform rules and market abuse detection.
• Non-discriminatory commercial policy and pricing methodology.
• Order execution policy.
• Information on crypto-asset transfer services.
• Description of the types of crypto-assets involved

Step-by-step process for obtaining a CASP license

• The company submits an application for a CASP license to the competent authority of the native state (the Financial Supervision Authority for Polish entities).
• The licensing authority transmits an acknowledgment of receipt of the application within five working days.
• Upon receipt of the application, the supervisory authority evaluates whether it is formally complete within 25 working days. If it is not, the authority will require the applicant to complete the documentation and establish a deadline for its completion. The supervisory authority may decline to process the application if the supplementary documentation is not submitted by the deadline.
• When the application is finalized, the supervisory authority will notify the applicant and commence the evaluation of the documents’ content.
• Authority may request additional information after 20 days (half of the assessment period) (maximum 20 days). The 20 days of assessment that remain commence on the day the response is transmitted to KNF (Financial Supervision Authority).
• The entire process is expected to take 40 business days, culminating in the decision to either grant or not grant the license.
• In case the license is granted, CASP will have to act according to MiCA rules.
• In case the license is not granted to the current VASP, the entity has to stop the operation services under the VASP license by September 30, 2025.