Introduction
The regulation of cryptocurrency businesses in Europe is undergoing a significant transformation with the introduction of the Markets in Crypto-Assets Regulation (MiCA). This legislation mandates that all companies offering crypto-related services within the European Economic Area must obtain a Crypto-Asset Service Provider (CASP) licence. The CASP framework is designed to enhance investor protection, strengthen market integrity, and prevent financial crime by enforcing strict compliance requirements.
A CASP licence is now a legal necessity for any business operating in the crypto sector in Europe. Without it, firms risk regulatory enforcement, financial penalties, and potential exclusion from banking and payment networks. The transition to a harmonised regulatory regime under MiCA replaces fragmented national licensing schemes, ensuring that crypto businesses can operate across the EU under a single set of rules.
This guide provides a detailed overview of the CASP licensing process, including its legal framework, eligibility criteria, compliance obligations, and key challenges businesses may face.
What is a CASP Licence?
A Crypto-Asset Service Provider (CASP) licence is a regulatory approval required for businesses offering services related to cryptocurrencies and digital assets within the European Union. Under MiCA, companies providing crypto-to-fiat and crypto-to-crypto exchange services, custody and safekeeping of digital assets, brokerage and investment advisory services, and the issuance or trading of crypto-assets must be authorised as CASPs.
A CASP licence ensures that crypto businesses operate within a regulated financial system, enforcing transparency, consumer protection, and financial stability. The European Securities and Markets Authority (ESMA) oversees CASP regulation, ensuring compliance with AML and counter-terrorist financing laws. MiCA introduces a uniform licensing regime, allowing CASPs registered in one EU member state to provide services across all 27 countries under the passporting mechanism.
Why a CASP Licence is Necessary
A CASP licence is not just a regulatory requirement but a necessity for any business that wants to operate legally and establish trust with customers, financial institutions, and regulators. The licence ensures compliance with MiCA’s investor protection measures, AML and CTF rules, and financial stability regulations. It also enables businesses to access banking services, fiat payment networks, and institutional investment opportunities.
Holding a CASP licence allows crypto firms to operate across the EU without needing multiple national licences, reducing administrative complexity and regulatory uncertainty. It also helps businesses build credibility with financial partners and institutional investors, who often require counterparties to be fully regulated. Without a CASP licence, companies risk being excluded from the European market, facing enforcement actions, and struggling to maintain relationships with banks and payment providers.
Regulatory Framework Governing CASP Licensing in Europe
The Markets in Crypto-Assets Regulation (MiCA) is the most comprehensive crypto regulatory framework introduced in Europe. It establishes a standardised licensing process, replacing the fragmented national regulatory approaches previously used by EU member states. Under MiCA, all CASPs must meet strict operational, transparency, and financial requirements to obtain and maintain their licences.
In addition to MiCA, crypto businesses must comply with AML directives, particularly the Fifth and Sixth Anti-Money Laundering Directives (5AMLD and 6AMLD). These regulations impose strict know-your-customer (KYC) and transaction monitoring requirements on CASPs, ensuring they implement measures to prevent money laundering, fraud, and terrorist financing. The Financial Action Task Force (FATF) Travel Rule also applies to CASPs, requiring them to collect and share transaction details for crypto transfers exceeding €1,000.
The combination of MiCA, AML directives, and FATF guidelines ensures that CASPs operate within a secure and transparent financial environment. Businesses seeking a CASP licence must demonstrate their ability to meet these compliance obligations through detailed operational plans, governance frameworks, and security measures.
Where to Obtain a CASP Licence in Europe
Several European jurisdictions have already implemented national CASP licensing regimes in preparation for MiCA’s full implementation. France, Germany, Lithuania, Estonia, and Malta are among the key locations where businesses can apply for a CASP licence.
France, through the Autorité des Marchés Financiers (AMF), requires CASPs to register and comply with strict AML and CTF regulations. The licensing process includes regulatory audits, detailed risk assessments, and continuous reporting obligations.
Germany has one of the most rigorous regulatory frameworks for CASPs, with the Federal Financial Supervisory Authority (BaFin) requiring crypto custody services to obtain a full financial institution licence. The process is complex, with high capital requirements and stringent compliance expectations.
Lithuania has become a popular destination for crypto businesses due to its efficient and cost-effective licensing process. The Bank of Lithuania oversees CASP registrations, offering a more straightforward approval process compared to larger EU economies. The country’s regulatory framework is still aligned with EU standards but has lower capital and staffing requirements.
Estonia was once known for its crypto-friendly approach but has significantly increased regulatory scrutiny in recent years. The Estonian Financial Intelligence Unit (FIU) now requires licensed CASPs to have a strong local presence, implement robust AML measures, and undergo regular compliance audits.
Malta has developed a highly structured regulatory framework for CASPs under the Malta Financial Services Authority (MFSA). While the country provides legal certainty for crypto businesses, the licensing process is rigorous, requiring extensive documentation and long approval times.
The CASP Licensing Process
The process of obtaining a CASP licence varies by jurisdiction but generally follows several key steps. The first stage involves pre-application preparation, where businesses determine the most suitable jurisdiction based on regulatory complexity, licensing costs, and business needs. Companies must prepare corporate documentation, AML/CTF policies, risk assessments, and operational plans.
Once the application is submitted, regulators conduct due diligence checks, assess the company’s compliance framework, and evaluate the financial standing of the business. The licensing authority may also conduct interviews with key personnel, including compliance officers and senior management, to verify their understanding of regulatory obligations.
After review, regulators may request additional documentation, amendments to operational policies, or further clarifications before granting approval. In some jurisdictions, an on-site inspection is required to assess the business’s physical presence and operational capabilities.
Once approved, CASPs must adhere to ongoing compliance obligations, including AML reporting, financial audits, and transaction monitoring. Non-compliance can result in financial penalties, licence suspension, or regulatory enforcement actions.
Challenges in Obtaining a CASP Licence
Securing a CASP licence can be a complex and time-consuming process due to the high regulatory standards imposed by MiCA and AML laws. One of the most significant challenges is meeting strict AML and CTF compliance requirements. Regulators expect businesses to have comprehensive risk management frameworks, advanced transaction monitoring systems, and customer due diligence processes in place.
Banking and payment access remains a critical issue for CASPs, as many financial institutions remain cautious about working with crypto businesses. Without a strong compliance framework and a clear regulatory status, firms may struggle to establish banking relationships, which can hinder operational efficiency.
Long approval times can also pose challenges, with some jurisdictions taking six months to a year to process applications. As MiCA is still being implemented, regulatory uncertainty may also impact the licensing process, requiring businesses to adapt to new compliance expectations.
Buckingham Capital Consulting’s Expertise in CASP Licensing and Crypto Compliance
Buckingham Capital Consulting is a leading regulatory advisory firm specialising in CASP licensing, crypto compliance, and AML frameworks. With over 15 years of experience, the firm assists businesses in obtaining regulatory approval across Europe, ensuring compliance with MiCA and national regulatory standards.
The firm provides end-to-end support in CASP licensing strategy, regulatory application drafting, AML/CTF compliance development, and regulatory interview preparation. Buckingham Capital Consulting’s expertise in financial regulation, risk management, and compliance audits makes it a trusted partner for businesses navigating the complex crypto regulatory landscape.
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.