Introduction
The Markets in Crypto-Assets Regulation (MiCA) represents the most significant regulatory change for the cryptocurrency industry in the European Union. Designed to eliminate fragmented national regulations, MiCA introduces a single, unified framework governing all crypto-asset activities across the European Economic Area.
Under MiCA, any business providing crypto-related services—whether exchanges, wallet providers, brokerage firms, or stablecoin issuers—must obtain a MiCA licence to operate legally. This new regime enforces strict compliance requirements related to anti-money laundering, consumer protection, financial stability, and operational resilience.
One of MiCA’s most transformative aspects is the introduction of regulatory passporting, allowing companies licensed in one EU member state to offer services throughout the entire bloc without needing additional authorisations. This simplifies cross-border expansion and ensures a consistent level of oversight across the region.
For businesses operating in the crypto sector, securing a MiCA licence is no longer optional. Without it, firms will be prohibited from offering services to European customers, and failure to comply could result in severe regulatory penalties. This guide provides a comprehensive breakdown of the MiCA licensing process, its compliance obligations, and the challenges businesses must navigate to secure approval.
What is a MiCA Licence?
A MiCA licence is a regulatory authorisation required for any company providing crypto-asset services within the European Union. It establishes a uniform licensing process for crypto businesses, replacing the individual national frameworks that previously existed across EU member states.
MiCA applies to a wide range of crypto-asset activities, including crypto-to-fiat and crypto-to-crypto exchange services, custody and safekeeping of digital assets, investment advisory services, and the issuance or trading of digital assets such as stablecoins.
Unlike previous EU regulations, which primarily focused on fiat-to-crypto transactions, MiCA extends its reach to cover all crypto-to-crypto transactions as well. It also introduces new disclosure and financial stability requirements for firms conducting initial coin offerings (ICOs) and issuing stablecoins, ensuring that investors have full transparency on the risks and governance structures of these assets.
MiCA applies to both centralised and decentralised business models, meaning that even decentralised finance (DeFi) protocols may come under regulatory scrutiny if they are deemed to be offering financial services in a structured manner.
Why a MiCA Licence is Legally Required
A MiCA licence is a mandatory legal requirement for any business that wants to operate in the EU’s crypto-asset market. Without this authorisation, companies will be unable to offer services to European customers, list digital assets on regulated exchanges, or establish relationships with banks and payment providers.
Regulators introduced MiCA to address concerns about fraud, market manipulation, and the lack of investor protection in the cryptocurrency industry. By enforcing strict licensing standards, MiCA ensures that only businesses meeting high compliance and financial stability standards can operate in the European market.
One of MiCA’s key advantages is that it provides regulatory clarity. Before MiCA, companies had to navigate a patchwork of different national laws, often requiring multiple registrations in different jurisdictions. MiCA eliminates this complexity by creating a single EU-wide licensing system that applies uniformly across all member states.
MiCA’s Passporting Rights and What They Mean for Crypto Businesses
One of the most significant benefits of MiCA is the introduction of passporting rights, which allow companies licensed in one EU member state to operate across all 27 countries without needing additional approvals.
Passporting simplifies market expansion by enabling Crypto-Asset Service Providers (CASPs)Â and other regulated entities to offer services seamlessly throughout the European Economic Area under a single authorisation. Once a company is licensed in one jurisdiction, it can onboard customers, market its services, and establish operations in any other EU country without having to obtain separate licences.
This creates significant cost and operational efficiencies for businesses looking to scale their services across Europe. It also ensures that consumers receive consistent regulatory protections, regardless of where they access crypto services.
However, passporting does not exempt companies from local legal considerations. Businesses must still comply with country-specific tax laws, advertising rules, and consumer protection regulations in the jurisdictions where they operate. Despite this, passporting under MiCA removes one of the biggest historical barriers to crypto business expansion in the EU, replacing fragmented national frameworks with a single, harmonised system.
MiCA’s Key Compliance Obligations
MiCA introduces a wide range of compliance obligations covering AML/CTF, financial stability, governance, and transparency.
Anti-money laundering (AML) compliance is one of the most critical aspects of MiCA. All licensed firms must implement robust know-your-customer (KYC) procedures, transaction monitoring systems, and suspicious activity reporting mechanisms. These requirements align with the European Union’s broader AML directives, ensuring that crypto businesses follow the same risk-based approach as traditional financial institutions.
Stablecoin issuers are subject to additional obligations. Any company issuing a stablecoin or asset-referenced token (ART) must maintain fully backed reserves to ensure that customers can redeem their holdings at any time. Algorithmic stablecoins without clear asset backing are strictly prohibited under MiCA.
Investor protection is another key focus area. Crypto businesses must provide clear disclosures regarding the risks, governance, and operational policies associated with their services. Exchanges and trading platforms must implement market abuse prevention measures, including systems to detect insider trading and price manipulation.
For custodial service providers, MiCA introduces strict security requirements, requiring firms to implement cold storage solutions, multi-signature wallets, and regular audits to protect customer funds. Any security breaches or operational failures could lead to regulatory enforcement actions, financial penalties, or licence revocation.
How to Obtain a MiCA Licence
The MiCA licensing process involves several stages, beginning with selecting a jurisdiction in which to apply. Although MiCA establishes a harmonised regulatory framework, each EU member state’s financial regulator is responsible for reviewing and granting licences.
Once a jurisdiction is selected, businesses must prepare a detailed application, including corporate governance structures, financial disclosures, operational risk assessments, and compliance frameworks.
Regulators conduct a fit and proper test to assess the qualifications and integrity of company directors, compliance officers, and senior executives. Some jurisdictions may also require interviews with key personnel to evaluate their understanding of MiCA’s compliance obligations.
After submission, the application undergoes a rigorous review process. Regulators may request additional information, amendments to operational policies, or further due diligence before granting approval. In some cases, an on-site inspection may be required to verify the company’s physical operations and security infrastructure.
Once approved, the MiCA licence allows the company to operate across the entire European Union, benefiting from regulatory passporting rights. However, compliance does not end with authorisation. Businesses must maintain ongoing regulatory reporting, periodic audits, and continuous adherence to MiCA’s standards to retain their licence.
Challenges in Securing a MiCA Licence
The MiCA licensing process presents several challenges, particularly for businesses that have not previously operated in a regulated financial environment.
One of the biggest hurdles is ensuring full AML/CTF compliance. Many crypto firms will need to upgrade their KYC verification systems, implement advanced transaction monitoring tools, and enhance fraud detection mechanisms to meet regulatory expectations.
Financial stability requirements also pose a challenge, particularly for stablecoin issuers, who must maintain sufficient capital reserves at all times.
Securing banking relationships is another critical issue. Despite being fully licensed, some crypto firms may still face difficulties accessing traditional banking services due to risk concerns within the financial sector. Establishing strong compliance credentials and maintaining a transparent operational model will be essential for businesses seeking banking partnerships.
The time frame for securing a MiCA licence is also a factor. Depending on the jurisdiction, the application process can take anywhere from six months to over a year, requiring businesses to plan accordingly.
Buckingham Capital Consulting’s Expertise in MiCA Licensing
Buckingham Capital Consulting is a specialist regulatory advisory firm with extensive experience in MiCA licensing, crypto compliance, and financial risk management. The firm provides strategic guidance to crypto businesses seeking MiCA authorisation, assisting with regulatory applications, compliance framework development, and risk assessment implementation.
With over 15 years of experience in financial regulation, Buckingham Capital Consulting has a proven track record of helping crypto businesses navigate complex regulatory environments. Its expertise covers all aspects of MiCA compliance, from AML procedures to governance structures and security protocols.
About Buckingham Capital Consulting
Buckingham Capital Consulting is an international consulting firm specialising in financial regulation, authorisation applications, compliance, and risk management. Since 2013, the firm has supported businesses in banking, e-money, payment services, investment services, and crypto-assets.
For further information, call 020 7866 2512, email info@buckinghamcapitalconsulting.co.uk, or visit www.buckinghamcapitalconsulting.com.