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Navigating MiCA Compliance: Best Practices for CASP License Applications



Navigating MiCAR Compliance: Best Practices for Fintech License Applications

An essential guide for CASP license application under MiCA


As a company providing compliance and regulatory advice in the fintech industry,

we wish to acknowledge the significance of preparing a comprehensive license application for crypto-asset service providers (CASPs) under the Markets in Crypto-Assets Regulation (MiCA).


At the time of writing this post, the adoption process of the MiCA implementing acts is still ongoing in Estonia.

Therefore, specific instructions on applying for a MiCA license are not available yet. However, based on the experience and knowledge gained from other countries like Holland and Austria and our professional expertise, we can outline the essential steps companies need to follow when applying for a license.


In this guide, we'll delve into essential best practices to ensure a high-quality application and mitigate the risk of operational disruptions.


When starting your license application preparation process, every CASP should pay significant attention to the following aspects:


  1. Scoping and Legal Advice: Before diving into the application process, it's crucial to determine which MiCA rules apply to your company. Seek guidance from specialist law firms to assess the scope of your services, such as operating a trading platform or providing advice on crypto-assets. This initial scoping exercise lays the foundation for a tailored and compliant application.

  2. Understanding MiCA Rules: Acquire in-depth knowledge of MiCAR rules and assess how they align with your organizational structure and business operations. Conduct a thorough gap analysis to identify areas requiring adjustment for MiCAR compliance. Planning and implementing necessary changes ahead of time minimizes last-minute scrambling and ensures a smoother application process.

  3. Seeking Expert Advice: While maintaining responsibility for your application, consider seeking expert advice from crypto industry professionals to bolster its quality. Consultants can offer valuable insights into designing and implementing control measures aligned with MiCA requirements. Their expertise can enhance the robustness of your application and increase the likelihood of approval. It is worth noting that here we are not talking about asking for legal advice, but about consultations with experts in blockchain and financial processes so that the service you specify gets the right description according to MiCA rules.

  4. Proactive Engagement with Regulatory Authorities: Initiate communication with the relevant regulatory authorities, such as the Estonian FSRA (Finantsinspektsioon), well in advance of formal application submission. Addressing matters with significant impact or lengthy lead times early on demonstrates proactive compliance efforts. Contact the Regulator to clarify scoping issues, establish control structures, or design asset segregation procedures.

  5. Timely Response to Regulatory Queries: Promptly respond to any inquiries from regulatory authorities throughout the application process. Be prepared to provide detailed explanations in writing or during supervisory interviews. Implement necessary organizational changes in response to feedback, such as enhancing internal risk management frameworks and compliance functions.

  6. Complete all Fit & Proper testing forms accurately for relevant personnel, highlighting their suitability for roles within your organization.

  7. Comprehensive Application Submission: Ensure your license application is comprehensive and meticulously prepared to demonstrate MiCA compliance effectively. Clearly articulate how your internal procedures meet regulatory requirements and provide concise references to supporting documentation, such as policies and procedures.


Conclusion:

Preparing a robust license application under MiCA is essential for fintech firms seeking to operate as crypto-asset service providers. By following these best practices, including scoping services, understanding regulatory requirements, seeking expert advice, engaging with regulatory authorities, and submitting a comprehensive application, fintech companies can navigate the licensing process successfully and establish compliance-centric operations in the rapidly evolving crypto ecosystem.


Gidea Advisory remains committed to supporting fintech firms in achieving regulatory compliance and fostering industry innovation.

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