Why is MiCA essential for cryptocurrency companies?

MiCA creates a clear and unified system of regulation of the cryptocurrency market across the EU, covering not only crypto exchanges and platforms but anyone offering services for storing, exchanging, or managing crypto assets. This regulation aims to ensure transparency, stability, and trust in the market and protect investors from possible risks. Previously, each country had its regulatory approaches, which complicated the work of companies seeking to operate in different jurisdictions. With MiCA, the situation will change dramatically.

For France, this means introducing new standards and a gradual transition from the existing national PSAN (Providers of Service for Digital Assets) regulatory regime to the latest European PSCA (Providers of Service for Crypto Assets) regime, which provides for compliance with MiCA requirements.

Critical changes for France under MiCA

1. Requirements for authorization: why is it important?

One of the essential aspects of MiCA is the requirement for authorization of all companies providing crypto services in the EU. In France, all companies already operating under the PSAN regime (simple or extended registration) must undergo a new authorization procedure by MiCA requirements. This authorization will grant the right to operate nationally and throughout the European Union through the European Passport mechanism.

What it means for companies:

• More than simple registration is required. If your company operates based on a “simple” PSAN, you must undergo a stricter procedure to obtain a full CASP (Crypto-Asset Service Provider) license.
• Extended PSAN registration: companies already registered under the extended procedure can take advantage of the simplified authorization process but still need to meet the MiCA requirements.

Authorization under MiCA provides stability and access to the European single market. Companies must have this authorization before December 30, 2024, to refrain from operating legally in the EU market. Without the appropriate approval, they will lose the right to provide their services in any country of the European Union, which may lead to suspension of operations and exclusion from the market.

2. Enhanced custodial services standards

French crypto asset custody companies face new MiCA requirements for securing and protecting client assets. These requirements require clients’ assets to be separated from the company’s assets, which will help protect investors from bankruptcy or financial difficulties.

What it changes for business:

• Asset allocation: previously, some companies could keep clients’ assets together with their own, but now MiCA requires a clear separation. This will protect clients’ funds from possible problems in the platform’s operation.
• Additional reserves for ART and EMT tokens: companies that offer ART (asset-backed tokens) and EMT (electronic money tokens) management services will have to ensure that they have reserves to cover these assets, which reduces investors’ risk of loss.

3. Transparency and client information

One of the most critical elements of MiCA is the requirement of transparency for clients. French platforms must provide clear information about the risks of investing in crypto assets. This includes:

• Providing clients with information about possible financial risks and conflicts of interest.
• Requiring explicit consent from clients to use their assets for certain transactions will increase the trust between the platform and its clients.

4. AML/CFT standards for the prevention of financial crimes

French cryptocurrency companies must comply with the MiCA’s anti-money laundering (AML) and counter-terrorist financing (CFT) requirements. This includes:

• Appointment of responsible persons for the implementation of measures to combat financial crimes.
• Mandatory reporting of suspicious transactions to regulatory authorities (AMF in France and other national regulators).
• These requirements are aimed at strengthening the security of the crypto market and ensuring its legality and transparency.

5. Transition period for companies in France

A transitional period has been introduced until June 30, 2026, for companies already operating in France under the PSAN registration. This means that such companies can continue to operate during the transition period without immediately obtaining the license required under MiCA. However, after this deadline, all companies must comply with the new standards and get a CASP license to continue operating in the European market.

What it means for companies:

• The ability to operate during the transition period

Companies operating under the current PSAN registration can continue to provide services until June 2026. However, they must start preparing to transition to the new MiCA standards to ensure business continuity.

• Fast adaptation

To avoid future problems, companies are advised to transition to MiCA standards as soon as possible. This includes implementing new requirements for asset management, transparency to clients, anti-money laundering, and countering the financing of terrorism.

• Expedited procedure for existing companies

French regulators are offering a simplified procedure for companies with a PSAN registration. Minimizing administrative obstacles will help them adapt to the new rules faster. As a result, companies can obtain a full CASP license faster and continue their operations without delay.

Conclusion

Introducing the MiCA regulation is an essential step towards harmonizing the cryptocurrency market in the European Union and creating new opportunities for cryptocurrency companies in France. To successfully adapt to the new requirements, companies must conduct a comprehensive compliance assessment, prepare the necessary documentation for authorization, train staff, and cooperate with regulators. Although the changes require considerable effort, MiCA opens the door to the single European market, improves investor protection, and increases trust in cryptocurrency services.

It is vital to start preparing to take advantage of the transition period and obtain a CASP license. This will allow you to operate seamlessly in the EU and reach new heights in the fast-growing crypto industry.

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Manimama Law Firm provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.

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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.