As the European regulatory landscape for crypto-assets evolves, significant strides are being made to establish a standardised framework for crypto-asset service providers (CASPs). This update covers the latest developments in the Baltic States, aligning with broader EU initiatives, including the landmark Markets in Crypto-Assets Regulation (MiCA).
EU-Wide Regulation: The Markets in Crypto-Assets Regulation (MiCA)
The MiCA framework seeks to harmonise crypto regulations across the European Union, with robust requirements for transparency, disclosure, authorisation, and supervision. MiCA sets out specific obligations for CASPs, excluding non-fungible tokens (NFTs) and assets already regulated under EU securities law, such as financial instruments and insurance products.
Key Provisions of MiCA:
- Authorisation Standards: CASPs must obtain EU authorisation to operate, with stringent fit-and-proper standards for management. Applications must meet comprehensive disclosure requirements.
- Ongoing Compliance: Authorised CASPs are subject to periodic audits, financial reporting, and supervision by national authorities, ensuring transparency and accountability across operations.
This framework is poised to reshape the crypto landscape across Europe, establishing a higher standard for CASP operations.
Lithuania: Streamlined Licensing for Crypto-Asset Service Providers
On September 20, the Bank of Lithuania introduced the CASP Licensing Rules to align local regulation with MiCA. These rules establish a clearer path for CASPs, enhancing efficiency and regulatory transparency.
Highlights of Lithuania’s CASP Licensing Rules:
- Application Process: Applications must include all required documentation in Lithuanian, accessible to clients before services commence.
- Assessment Timeline: The Bank of Lithuania will assess applications for completeness within 25 working days.
- Transparency: Licensing decisions will be publicly accessible on the Bank’s website, fostering transparency for market participants.
Public consultations concluded on October 11, with feedback from industry associations now under review.
Latvia: New Legal Framework for Crypto-Assets
Latvia has enacted the Law on Crypto-Asset Services, effective from June 30, marking a significant step in supporting the crypto market’s development in alignment with MiCA.
The Authorisation Process in Latvia:
- Pre-Application Meetings: The Bank of Latvia offers initial consultations for prospective CASPs, providing an opportunity to review business models, shareholders, and services before formal application.
- Application Submission: Once ready, applicants submit detailed documentation (mainly in Latvian), with a €2,500 fee. Decisions are typically issued within 40 working days.
- Post-Authorisation Obligations: Authorised CASPs must meet ongoing reporting requirements and notify the Bank of Latvia of any changes in their service processes or submitted information.
Latvia’s approach is designed to facilitate market entry while maintaining high standards for transparency and compliance.
Estonia: The Market in Crypto-Assets Act (KrüTS)
Estonia’s Market in Crypto-Assets Act (KrüTS), aligned with MiCA and the EU’s Digital Operational Resilience Act (DORA), establishes a comprehensive framework for CASPs.
Core Requirements under Estonia’s Market in Crypto-Assets Act:
- Authorisation: CASPs must register as companies in Estonia, with at least two management board members meeting fit-and-proper standards. The initial application fee is set at €3,000.
- Compliance Timeline: Key MiCA provisions will be effective in mid-2024, with full compliance required by the end of 2024. Existing CASPs have until July 1, 2026, to obtain authorisation.
- Supervisory Compliance: CASPs are required to undergo annual audits and submit financial reports, ensuring ongoing regulatory adherence and market integrity.
Estonia’s framework provides a structured pathway for CASPs, with clear compliance expectations aligned with EU directives.
For further details on how TEGOS can support your compliance and licensing needs under MiCA, please contact our team of experts.
