MiCA CASP License – Cyprus Requirements and Process

  • February 26, 2025

The cryptocurrency landscape in the European Union (EU) is undergoing a transformative shift with the introduction of the Markets in Crypto-Assets Regulation (MiCA). Fully effective as of December 30, 2024, MiCA establishes a unified regulatory framework for crypto-asset service providers (CASPs) across all 27 EU member states. For businesses looking to operate legally in this space, obtaining a MiCA CASP license is essential. Cyprus, with its progressive regulatory environment and business-friendly policies, stands out as a prime jurisdiction for securing this license.

At Chambers Company Formation, we specialize in guiding crypto businesses through the complexities of MiCA compliance and CASP licensing in Cyprus. This comprehensive guide outlines the MiCA CASP license requirements, the step-by-step process to obtain it in Cyprus, and the full suite of services we offer to ensure your business thrives in the EU crypto market.

What is the MiCA CASP License?

The MiCA CASP license is a mandatory authorization for entities providing crypto-asset services within the EU. It replaces the previous Virtual Asset Service Provider (VASP) designation under national frameworks, such as Cyprus’s CASP regime supervised by the Cyprus Securities and Exchange Commission (CySEC). MiCA introduces a harmonized set of rules to enhance transparency, security, and consumer protection while allowing CASPs to operate seamlessly across the EU through passporting rights.

Services covered under the MiCA CASP license include:

    • Custody and administration of crypto-assets on behalf of clients.
    • Operation of crypto-asset trading platforms.
    • Exchange of crypto-assets for fiat currency or other crypto-assets.
    • Execution, reception, and transmission of crypto-asset orders.
    • Providing advice or portfolio management for crypto-assets.
    • Placing of crypto-assets.

With MiCA fully in force as of December 30, 2024, and license applications open since January 1, 2025, businesses must act swiftly to comply. Cyprus offers a strategic advantage due to its established crypto regulatory framework and alignment with MiCA standards.

Why Choose Cyprus for Your MiCA CASP License?

Cyprus has long been a hub for financial innovation, thanks to its favorable tax regime, strategic location, and robust legal system based on English common law. The Cyprus Securities and Exchange Commission (CySEC) has been a pioneer in regulating crypto-assets, making it one of the most MiCA-ready jurisdictions in the EU. Key benefits of obtaining a MiCA CASP license in Cyprus include:

    1. Seamless Transition: Existing CASPs registered with CySEC can leverage a transitional period until July 1, 2026, to align with MiCA requirements.
    1. Passporting Across the EU: A MiCA CASP license issued in Cyprus allows you to offer services throughout the EU without additional licenses.
    1. Business-Friendly Environment: Cyprus offers a competitive corporate tax rate of 12.5% and a well-developed infrastructure for fintech and crypto businesses.
    1. Regulatory Expertise: CySEC’s experience with crypto regulation ensures a streamlined application process and ongoing compliance support.

MiCA CASP License Requirements in Cyprus

To obtain a MiCA CASP license in Cyprus, applicants must meet stringent requirements set by MiCA and enforced by CySEC. These requirements ensure financial stability, operational integrity, and consumer protection. Below is a detailed breakdown:

1. Legal Entity and Local Presence

    • EU-Based Entity: The applicant must be a legal entity registered in an EU member state, typically a Cyprus-limited company for those applying through CySEC.
    • Physical Office: A fully operational office in Cyprus is required, where at least part of the business activities are conducted.
    • Management: At least one director must be an EU resident, and strategic decision-making must occur within the EU.

2. Capital Requirements

MiCA categorises CASPs into three classes based on services offered, each with a corresponding minimum capital threshold:

    • Class 1 (€50,000): For services like reception and transmission of orders, providing advice, executing orders, or placing crypto-assets.
    • Class 2 (€125,000): Includes Class 1 services plus exchanging crypto-assets for fiat or other crypto-assets and operating trading platforms.
    • Class 3 (€150,000): Encompasses Class 2 services plus custody and administration of crypto-assets.

Applicants must maintain these funds as a financial buffer and register the capital with the Cyprus Registrar of Companies.

3. Governance and Personnel

    • Fit and Proper Management: Directors and key personnel must demonstrate good repute, relevant expertise, and no criminal history.
    • Local AML Specialists: Senior-level Anti-Money Laundering (AML) compliance officers, such as a Compliance Officer (CCO) or Money Laundering Reporting Officer (MLRO), must be based in Cyprus.

4. AML and Compliance Policies

    • Internal Policies: Comprehensive policies for AML, Counter-Terrorism Financing (CTF), risk management, client fund safeguarding, and confidentiality are mandatory.
    • KYC and Monitoring: Robust systems for Know Your Customer (KYC) verification, transaction monitoring, and prevention of illicit activities must be in place.

5. Operational and Technical Standards

    • Secure Systems: CASPs must implement secure custody solutions for client assets and ensure business continuity in case of disruptions.
    • White-paper (if applicable): Issuers of crypto-assets must submit a detailed whitepaper compliant with MiCA’s disclosure requirements.

6. Financial Institution Account

    • An operational bank account with an EU-based credit institution (not an EMI) is required for fiat transactions.

Step-by-Step Process to Obtain a MiCA CASP License in Cyprus

The process of obtaining a MiCA CASP license in Cyprus involves several stages, from company formation to regulatory approval. Here’s how it works with CySEC:

Step 1: Pre-Application Preparation

    • Form a Cyprus Company: Register a legal entity with the Cyprus Registrar of Companies.
    • Develop Business Plan: Outline your services, operational model, and compliance framework.
    • Assemble Documentation: Prepare internal policies, governance structures, proof of capital, and personnel details.

Step 2: Preliminary Assessment (Optional)

    • As of November 13, 2024, CySEC accepts applications for a preliminary assessment. This step allows applicants to submit documents early and receive feedback before the formal process begins on December 30, 2024.

Step 3: Formal Application Submission

    • Submit your application via the CySEC online portal starting January 1, 2025. Required documents include:
        • Application form.
        • Business plan and scope of services.
        • Proof of capital and bank account.
        • AML/CTF policies and KYC procedures.
        • Details of directors and key personnel.
        • Technical and security protocols.

Step 4: Initial Review

    • CySEC reviews the application for completeness within 25 business days. If incomplete, applicants are given a deadline to provide additional information.

Step 5: Detailed Assessment

    • Within 3 months, CySEC conducts a thorough evaluation of compliance with MiCA requirements. This includes assessing governance, financial stability, and operational readiness.

Step 6: Decision and Notification

    • CySEC issues a reasoned decision within 3 business days of the assessment. Approved CASPs are added to the EEA CASP Register, enabling EU-wide operations.

Step 7: Ongoing Compliance

    • Post-licensing, CASPs must submit regular reports to CySEC, maintain capital levels, and adhere to MiCA’s evolving standards.

Chambers Company Formation: Your Complete MiCA CASP Solution in Cyprus

At Chambers Company Formation, we offer a full-service package to simplify the MiCA CASP licensing process and position your business for success in Cyprus and the EU. Our expert team, with deep knowledge of CySEC regulations and MiCA compliance, provides end-to-end support tailored to your needs.

Our Comprehensive Service Package

    1. Company Formation in Cyprus
        • Incorporation of a Cyprus-limited company.
        • Registration with the Cyprus Registrar of Companies.
        • Assistance with opening an EU credit institution bank account.
    1. MiCA CASP License Application Support
        • Drafting and review of all required documentation (business plan, AML policies, white-papers, etc.).
        • Submission of preliminary and formal applications to CySEC.
        • Liaison with CySEC throughout the review process.
    1. Regulatory Compliance Setup
        • Development of AML/CTF policies, KYC procedures, and risk management frameworks.
        • Appointment and training of local AML specialists (CCO, MLRO).
    1. Capital and Governance Assistance
        • Guidance on meeting MiCA capital requirements and capital injection processes.
        • Recruitment and vetting of fit-and-proper directors and personnel.
    1. Operational Infrastructure
        • Assistance in securing a physical office in Cyprus.
        • Implementation of secure technical systems for crypto-asset custody and trading.
    1. Post-Licensing Support
        • Ongoing compliance monitoring and regulatory reporting to CySEC.
        • Updates on MiCA amendments and EU regulatory developments.
        • Business expansion advisory for leveraging passporting rights.

Why Choose Chambers Company Formation?

    • Proven Expertise: Years of experience in Cyprus company formation and crypto licensing.
    • Tailored Solutions: Customised services to match your business model and goals.
    • Strong CySEC Relationships: Direct connections with regulators for a smoother process.
    • End-to-End Convenience: From setup to compliance, we handle it all.

Timeline and Costs

    • Timeline: The MiCA CASP licensing process typically takes 3-6 months, depending on preparation and CySEC’s review speed. Early preparation is key, especially with the December 30, 2024, enforcement date.
    • Costs: Licensing fees start at approximately €4,500, with annual contributions of up to 0.5% of revenue (minimum €750). Additional costs include capital requirements, legal fees, and operational setup.

Conclusion

The MiCA CASP license is your gateway to operating legally and competitively in the EU’s crypto market. Cyprus, with its regulatory clarity and business advantages, is the ideal jurisdiction to secure this license. At Chambers Company Formation, we’re committed to making the process seamless, efficient, and successful for your business.