In 2024, over 70% of crypto startups planning to enter the European market faced the need to revise their strategies due to new requirements of the MiCA regulation, the first comprehensive law on crypto-assets in the EU. According to ESMA, only 18% of companies applying for CASP (Crypto Asset Service Provider) status successfully passed the preliminary compliance audit in pilot jurisdictions. This is more than just statistics; it’s a signal to rethink the approach to registering legal entities in the EU and licensing crypto services.
Why are so many players unprepared for MiCA? What risks does MiCA implementation pose for international crypto companies? Why are even large projects starting to look towards El Salvador, a jurisdiction where cryptocurrency regulation is based on principles of accessibility and speed? How to choose a strategy to avoid being left out in a market undergoing consolidation and tightening compliance requirements?
In this article, I will share the experience of the COREDO team, which has been supporting international projects in the EU, Asia, and the CIS since 2016, and show how tasks of company registration, obtaining financial licenses, implementing AML for crypto business, and strategic compliance planning are practically solved under MiCA conditions and alternative regimes. If you want to understand how to prepare for MiCA implementation in 2025, evaluate the advantages of registering a company in El Salvador, or choose the optimal jurisdiction for scaling: read to the end. Here you will find not only risk analysis but also specific tools for decision-making.
Crypto Asset Regulation under MiCA
Crypto Asset Regulation under MiCA creates a new regulatory environment for working with digital assets in EU countries. Thanks to these rules, a unified system of requirements arises, increasing transparency, protecting investors, and establishing obligations for crypto companies. Let’s further examine what specific requirements MiCA imposes on participants in the EU crypto market.
MiCA Requirements for Crypto Companies in the EU
MiCA regulation introduces strict standards for all participants in the crypto asset market in Europe. For companies applying for CASP status, the key requirements are:
- Licensing of crypto services: To enter the EU market, it is required to obtain a license issued by the national regulator and approved by ESMA. The process includes a comprehensive review of the corporate structure, sources of funding, and business model.
- AML for crypto business: Implementing anti-money laundering and counter-terrorism financing (AML/CFT) procedures becomes mandatory. Companies must develop and maintain internal CDD (customer Due Diligence) policies, identify ultimate beneficiaries, implement KYC procedures, and ensure transparency of operations.
- Whitepaper for tokens: Issuing utility tokens, ARTs, or EMTs requires preparing a formalized whitepaper revealing technical details, risks, investor protection mechanisms, and compliance with MiCA requirements.
- Corporate governance: MiCA imposes requirements on corporate structure transparency, regular auditing, and reporting, especially relevant for companies working with crypto assets and stablecoins.
- Travel Rule: All CASPs are obligated to implement a mechanism for transferring client information for cross-border crypto asset transfers, requiring integration with international FATF standards.
MiCA Implementation: Challenges and Risks
MiCA regulation: is not just a set of formal requirements. For most companies, the key challenge becomes the compliance cost: costs of audits, legal support, AML/KYC implementation, operation monitoring automation, and whitepaper preparation. According to COREDO’s estimates, for an average crypto service in the EU, the cost of full MiCA compliance implementation can reach 250-500 thousand euros in the first year, with market entry timelines ranging from 6 to 18 months.
Among the long-term consequences of the MiCA regulation, there is an increase in operational costs, stricter corporate governance requirements, and the risk of small players exiting the market. For entrepreneurs, this means the need for strategic compliance planning and evaluating the ROI of MiCA implementation.
MiCA and AML Rules for Crypto Business
MiCA regulation integrates with EU directives on AML/CFT, making anti-money laundering and counter-terrorism financing a central element of cryptocurrency regulation in Europe. For CASPs and other market participants, this means:
- Mandatory implementation of customer due diligence (CDD) procedures, continuous transaction monitoring, and identifying suspicious activities.
- Implementation of the Travel Rule for all cross-border crypto asset transfers.
- Increased requirements for transparency of operations and investor protection.
Cryptobusiness Regulation in El Salvador
Cryptobusiness Regulation in El Salvador today stands out with one of the most innovative and open approaches in the world. The development of the legislative base, the introduction of special licenses, and the focus on AML procedures have created a unique environment here for the legalization and protection of cryptocurrency services. This is reflected in both licensing requirements and AML regulation for market participants.
Licensing and AML in El Salvador
Unlike the EU, where MiCA regulation sets a complex multi-level structure, El Salvador offers a maximally simple model for licensing crypto services. The CNAD (National Commission for Digital Assets) regulator issues VASP (Virtual Asset Service Provider) licenses within 1-3 months with a minimal document package:
- Charter documents of the company, information about beneficiaries, and KYC procedures.
- Description of the business model and basic AML policies that comply with FATF standards but without excessive bureaucracy.
- No obligatory requirements for whitepapers and corporate governance.
Company Registration in El Salvador: Pros and Cons
The key advantage of registering legal entities in El Salvador is speed and low costs. Government support of crypto business, the absence of complex reporting, and flexibility of AML procedures make the jurisdiction attractive for startups and small companies. However, there are also limitations:
- The jurisdiction’s reputation still lags behind the EU and the UK, which can complicate access to banking services in Europe.
- For cross-border operations and working with institutional investors, additional legal support will be required.
- Risks for small and medium businesses are associated with the uncertainty of international recognition of licenses and the need for integration with global AML standards.
Comparison of Jurisdictions: EU, Asia, Africa
For international crypto projects, choosing a jurisdiction is a balance between compliance requirements, market entry speed, and opportunities for innovations. In Asia (Singapore, Hong Kong), digital assets regulation is based on transparency and technological neutrality principles, but it requires local presence and KYC/AML implementation at a global standard level.
MiCA or Regulation in El Salvador – What to Choose?
| Criterion | MiCA (EU) | El Salvador |
|---|---|---|
| License Requirements | Strict, lengthy process, high cost | Quick, simple, low costs |
| AML/CTF | Strict, under ESMA and FATF control | FATF standards, but simpler implementation |
| Whitepaper Requirements | Formalized, mandatory disclosure of information | Minimal, flexible |
| Investor Protection | High level, strict control | Basic requirements |
| Corporate Governance | Formalized, reporting, audit | Minimal requirements |
| Jurisdiction Reputation | High, access to EU banks | Medium, limited access to banks |
| Opportunities for Innovation | Limited by compliance | High flexibility |
| Risks for Small Business | High costs, market exit risks | Startup accessibility |
| Market Entry Timelines | 6-18 months | 1-3 months |
Choice of Jurisdiction and Preparation for MiCA
Choice of jurisdiction and preparation for MiCA becomes one of the key stages for crypto projects planning to operate in the European Union. The legislation establishes unified requirements for issuers and service providers, so a competent choice of country of registration and early preparation for the new MiCA standards determines how quickly and efficiently the business will adapt to the new rules.
MiCA Implementation: What Needs to Be Done?
COREDO’s experience shows that successful adaptation to MiCA regulation requires a phased approach:
- Conduct an internal audit of corporate structures, business processes, and existing compliance policies.
- Develop a MiCA implementation strategy: identify key risk zones, assess compliance costs, plan AML/KYC automation.
- Prepare whitepaper and documentation in accordance with MiCA requirements for the business.
- Establish partnerships with regulators and professional associations for quick information exchange and obtaining clarifications on complex issues.
Alternative Jurisdictions for Business
Deciding on jurisdiction choice should be based on an analysis of the business model, target markets, and compliance readiness. Alternative jurisdictions (El Salvador, Singapore, Mauritius) become optimal if:
- Your business model requires quick market entry and cost minimization.
- The project is focused on innovations and flexibility, not on institutional investors in the EU.
- There is a need to diversify corporate structures and reduce operational costs.
How to Evaluate Compliance ROI?
Evaluating MiCA compliance ROI involves not only analyzing direct costs but also forecasting long-term consequences for companies:
- Operational expenses: MiCA compliance implementation increases costs by 20-40% in the first year but reduces the risk of fines and blockages.
- Long-term planning: Companies investing in compliance automation gain a competitive advantage by reducing costs and speeding up processes.
- Innovation and market diversification: A multi-jurisdictional presence strategy allows maintaining flexibility and adapting to regulatory changes.
Conclusions and Recommendations for Business
Checklist for choosing a jurisdiction:
- Evaluate licensing and compliance requirements in each jurisdiction.
- Analyze access to banking services and jurisdiction reputation.
- Calculate timelines and costs for legal entity registration and obtaining a license.
- Consider risks for small businesses and opportunities for innovation.
Algorithm for preparing for MiCA:
- Internal audit of processes and structures.
- Development of compliance strategy and automation of AML/KYC.
- Preparation of whitepapers and information disclosure according to MiCA.
- Interaction with regulators and professional associations.
Tips for reducing compliance costs:
- Utilize automated solutions for transaction monitoring and CDD.
- Engage external experts for audits and process optimization.
- Diversify corporate structures to reduce operational costs.
Recommendations for jurisdiction diversification:
- Consider a multi-jurisdictional model with registration in the EU, El Salvador, and Asia.
- Utilize the advantages of each jurisdiction for tax optimization and market access.
Key Questions for Entrepreneurs
What strategic risks does MiCA implementation pose for international crypto companies?
How does MiCA affect the costs and timelines for market entry in the EU for crypto business?
What are the advantages and disadvantages of regulation in El Salvador compared to MiCA?
How to ensure compliance with the Travel Rule and AML requirements within MiCA?
What new requirements for whitepapers and information disclosure does MiCA impose?
How does MiCA impact corporate governance of crypto companies?
If you need to choose a jurisdiction, prepare a company for MiCA regulation, or minimize risks of implementing new standards, the COREDO team is ready to offer comprehensive solutions based on international experience and deep market knowledge.