Understanding the CASP License in the Cryptocurrency Sector

Understanding the CASP License in the Cryptocurrency Sector

With the upcoming implementation of the Markets in Crypto-Assets (MiCA) Regulation, companies aiming to offer cryptocurrency-related services within the European Union will soon be required to obtain a CASP license—short for Crypto Asset Service Provider license.

If you’re planning to launch or expand a crypto venture in the EU, it’s crucial to understand the CASP framework and the obligations it introduces. This article offers detailed insights to guide you through the upcoming changes.

Currently recognized as Virtual Asset Service Providers (VASPs), businesses will transition into the CASP category once MiCA takes effect. Holding a CASP license will become mandatory for offering the following services:

• Custody and safekeeping of crypto assets on behalf of clients
• Operation of cryptocurrency trading platforms
• Exchange between crypto assets and fiat currencies
• Exchange between various crypto assets
• Execution of crypto asset transactions on behalf of clients
• Offering crypto assets to the public
• Receiving and forwarding orders for crypto transactions
• Providing advisory services related to digital assets
• Portfolio management involving crypto assets
• Facilitating the transfer of crypto assets

One of the major advantages of obtaining a CASP license is the ability to “passport” services across all EU member states, enabling licensed firms to operate seamlessly throughout the Union.

When Will MiCA Apply to Crypto Businesses in the EU?

The Markets in Crypto-Assets (MiCA) Regulation officially took effect on December 30, 2024. From this date forward, any business wishing to launch crypto-related services in the EU must first secure a CASP (Crypto Asset Service Provider) license.

Entities that were not involved in cryptocurrency services before MiCA’s enforcement will be required to obtain the CASP license prior to commencing operations.

Transitional Period for Existing VASPs
Organizations currently registered as Virtual Asset Service Providers (VASPs) in Poland will be able to continue offering their services temporarily under a transitional arrangement—estimated to last until September 30, 2025.

Polish Legislative Perspective
According to the draft provisions of Poland’s upcoming Crypto Asset Market Act (specifically Articles 161 and 163), the transitional period will work as follows:

• Until June 1, 2025, if the CASP license application is not submitted by May 1, 2025.
• Until a decision is issued on the CASP application—but no later than September 30, 2025: if a complete application is submitted on time.

To ensure smooth processing, it is recommended that existing VASPs submit their applications no later than the beginning of April 2025. This takes into account the 20-working-day review period set for the Polish Financial Supervision Authority (KNF) to assess CASP applications.

It’s important to note that these dates are still subject to change, as the legislative process in Poland is ongoing.

What Services Are Covered by a CASP License?

A Crypto Asset Service Provider (CASP) license under the MiCA framework can be tailored to include a single service or multiple services, depending on the specific business model of the applicant. The license authorizes companies to operate across various areas of the crypto asset industry, including:

• Custody and Safekeeping of Crypto Assets
  This involves holding or managing crypto assets on behalf of clients, including control over access credentials such as private cryptographic keys.
• Operating a Crypto Trading Platform
  This refers to managing one or more multilateral systems that match third-party buy and sell orders for crypto assets, enabling contracts between users for fiat-to-crypto or crypto-to-crypto exchanges.
• Fiat-to-Crypto Exchange Services
  This service allows companies to engage in the buying or selling of crypto assets in exchange for fiat currencies using their own capital.
• Crypto-to-Crypto Exchange Services
  Similar to the above, transactions involve the exchange of one cryptocurrency for another, again using the firm’s proprietary funds.
• Order Execution on Behalf of Clients
  This involves facilitating client transactions by executing purchase or sale agreements for one or more crypto assets, including participation in public offerings or listings.
• Placement of Crypto Assets
  This means marketing crypto assets to potential buyers on behalf of the issuer or a related party.
• Receiving and Transmitting Orders
  Accepting orders from clients to buy, sell, or subscribe to crypto assets and passing them on to another entity for execution.
• Crypto Asset Advisory Services
  Offering tailored investment advice to clients regarding specific transactions or the use of crypto asset services, whether requested by the client or initiated by the service provider.
• Crypto Portfolio Management
  Managing client investment portfolios that include crypto assets, based on discretionary mandates provided on an individual basis.
• Crypto Asset Transfers
  Facilitating the transfer of crypto assets from one distributed ledger address to another on behalf of clients.

The combination of services you choose to include in your CASP license application will determine your firm’s operational obligations, including the capital requirements you must satisfy. The broader your service scope, the more extensive the regulatory compliance obligations.

Who Is Eligible to Apply for a CASP License?

Under the MiCA Regulation, the following entities will be permitted to offer crypto-asset services within the European Union:

• Authorized CASPs
  These are companies that have successfully obtained a CASP license in accordance with Article 63 of MiCA. In the context of Poland, the most typical legal forms for such entities are limited liability companies (spółka z ograniczoną odpowiedzialnością) and joint-stock companies (spółka akcyjna).
• Regulated Financial Institutions
  Certain financial entities already operating under EU financial law may also provide crypto-asset services without obtaining a separate CASP license, provided they comply with Article 60 of MiCA. These include:
  • Credit institutions (banks)
  • Central securities depositories
  • Investment firms
  • Market operators
  • Electronic money institutions
  • UCITS management companies
  • Alternative investment fund managers (AIFMs)

These organizations may integrate crypto-related services into their existing operations, provided they adhere to MiCA’s regulatory standards.

What Are the Key Requirements for CASP License Applicants?

To obtain a CASP license under Article 63 of the MiCA Regulation, applicants must meet several organizational and regulatory criteria:

• Establishment Within the EU
  The applicant must have its registered office located in the EU Member State where it intends to conduct at least part of its crypto-asset service activities.
• EU-Based Management
  The company’s management body must operate from within the European Union, and at least one director must be an EU resident.
• Capital Adequacy
  Applicants are required to meet minimum initial capital thresholds, which vary depending on the type and scope of crypto services offered.
• Internal Governance and Documentation
  Firms must submit comprehensive internal policies and procedures as outlined by MiCA, covering areas such as risk management, compliance, and cybersecurity.
• Fit and Proper Management
  Members of the management board must demonstrate good repute, a clean criminal record, and possess adequate expertise, both individually and as a group, to manage crypto-asset activities effectively.

Meeting these standards is essential for securing authorization and maintaining regulatory compliance within the EU crypto market.