Crypto Licence

The crypto licensing market has gone through three main stages. Before 2020, most jurisdictions either did not regulate cryptocurrency activities or treated them by analogy with traditional financial services. From 2020 to 2024, countries began introducing their own national VASP regimes in line with FATF recommendations: Estonia, Lithuania, Georgia, Kyrgyzstan, UAE. On 30 December 2024, the EU’s MiCA Regulation (Regulation (EU) 2023/1114) entered into full force in the European Union, replacing the fragmented national regimes with a single passportable CASP standard.

Today, the choice of jurisdiction for obtaining a crypto licence is determined by several factors: target audience (EU clients — CASP, global markets — VASP), licensing timelines and costs, share capital and physical presence requirements, and the stability of the regulatory environment.

Why is a licence necessary? First, it provides the legal basis for operations: without a licence, a company cannot legally onboard clients, open bank accounts, or enter into partnerships with payment systems. Second, a licence opens access to institutional clients and investment capital, which require proper regulatory status of the counterparty. Third, in the case of a CASP under MiCA rules, a single European licence confers the right to operate in all 27 EU member states.

For businesses targeting markets outside the EU, the regulatory landscape varies significantly. The UK operates an independent crypto regulation framework following Brexit, while Canada offers pathways for crypto businesses through Money Services Business (MSB) registration and provincial securities oversight.

United Kingdom (FCA). The Financial Conduct Authority (FCA) oversees crypto-related activities in the UK under the Money Laundering Regulations 2017 (MLR 2017). Crypto businesses must apply for FCA registration as a crypto-asset business. The FCA introduced its financial promotions regime for crypto assets effective October 2023, requiring careful compliance with advertising standards. While the UK lacks a comprehensive unified crypto licensing framework comparable to MiCA, the FCA’s regulatory perimeter continues to expand. Businesses providing custodial, exchange, or advisory services with crypto-assets must navigate both FCA registration requirements and ongoing regulatory guidance.

Canada (FINTRAC / CSA). Canada’s approach involves multiple regulators. The Financial Transactions and Reports Analysis Centre (FINTRAC) oversees Money Services Business (MSB) registration for crypto exchanges and platforms facilitating crypto transactions. The Canadian Securities Administrators (CSA) provides guidance on when crypto-assets qualify as securities, triggering oversight by provincial securities commissions. The regulatory framework spans federal FINTRAC registration for AML/CFT compliance and provincial-level oversight depending on the nature of services provided. This dual-regulator system requires careful structuring of business models and compliance frameworks.

The MiCA Regulation (Markets in Crypto-Assets Regulation, Regulation (EU) 2023/1114) is the foundational legal act of the European Union establishing uniform requirements for crypto-asset service providers across the entire EU. MiCA entered into full force on 30 December 2024 and has direct effect in all 27 EU member states without the need for separate implementation into national law.

Before MiCA, each EU state created its own VASP regulatory regime based on FATF recommendations. In the Czech Republic this was registration through the trade licensing system, in Lithuania — VASP registration with the Financial Intelligence Unit (FNTT), in Estonia — licensing through the Financial Intelligence Unit (FIU). All these regimes were largely unharmonised with each other.

MiCA introduces three classes of CASP licence depending on the type of services provided and the associated risks. Class 1 covers order execution, transfer, reception and transmission of orders, advisory and portfolio management, and transfer of crypto-assets; the minimum own funds requirement is EUR 50,000. Class 2 additionally includes custody and administration of crypto-assets and exchange of crypto-assets for fiat money or other crypto-assets; minimum capital is EUR 125,000. Class 3 also covers the operation of a trading platform for crypto-assets; minimum capital is EUR 150,000 (Art. 67 and Annex IV to MiCA).

The key benefit of MiCA for businesses is the single passport (Art. 65). A company that has received CASP authorisation in any EU member state may provide services to clients in all 27 EU countries by submitting the relevant notification to its regulator, which forwards the information to the competent authority of the host country and ESMA.

Transitional period for existing providers. Companies that were providing crypto-asset services under national legislation before 30 December 2024 may continue their activities under the transitional period. The duration of the transitional period varies by country: the maximum period is 18 months (until 1 July 2026). Some EU states (Netherlands, Poland) have established shorter transitional periods that have already expired. After the end of the transitional period, a company must hold a valid CASP authorisation — otherwise continued operations are unlawful.