What is MiCA Regulation? EU regulation on markets in crypto assets MICA

The Markets in Crypto-Assets Regulation (MiCA) establishes uniform EU market rules for crypto-assets. The regulation covers crypto-assets that are not currently regulated by existing financial services legislation. Its key provisions address transparency, disclosure, authorisation, and the supervision of transactions for crypto-asset issuers and traders, including those dealing with asset-referenced tokens and e-money tokens. By regulating public offerings of crypto-assets and enhancing consumer awareness of associated risks, this new legal framework aims to promote market integrity and safeguard financial stability.

What is MiCA Regulation?

The Markets in Crypto-Assets (MiCA) regulation is a landmark framework created by the European Commission (EC) that focuses on maintaining financial stability. It also is designed to protect investors and promote widespread transformation in the crypto asset sector in European Union (EU) countries.

What is crypto assets market and what will MiCA apply to?

EU MiCA regulation generally states that a crypto asset is a digital representation of a value or right that can be transferred and stored electronically using distributed ledger technology or similar technology.

To govern crypto assets, MiCA classifies them into three groups:

EMTs, which are electronic or e-money tokens
ARTs, which are asset-referenced tokens
Any other crypto asset tokens not covered in the first two groups

EMTs are crypto assets that are backed by a single official (fiat) currency. EMTs are subject to very strict regulatory requirements. MiCA’s EMT rules are set out under Title IV and have applied since 30 June 2024.

Asset-referenced tokens (ART) may represent a value, a right, or a mix of both, stabilizing their value by using one or more official currencies. MiCA’s ART rules are set out under Title III and have applied since 30 June 2024.

The last group of assets outlined by MiCA provides a ‘catch-all’ for any assets that aren’t EMTs or asset-referenced. Rules for this group of assets are set out under Title II of MiCA. A common example of a token asset that falls into this group is the utility token, which is not classified as a financial instrument according The Markets in Financial Instruments Directive (MiFID II).

MiCA Exclusions

One of the more interesting aspects of MiCA is that several blockchain-related assets are not considered crypto-assets, at least as far as falling under any definitions set in this legislation. For example, it mentions explicitly as excluded:

Crypto assets that fall under the scope of financial instruments
Those that qualify as deposits or structured deposits
Assets that qualify as funds
Those that qualify as securitization positions
Crypto-assets that qualify as non-life or life insurance policies
Pension product and social security schemes
Non-fractionalized non-fungible tokens (NFT)
Transactions between certain public entities and groups
Central Bank Digital Assets
Non-transferrable digital assets
Financial instruments that fall under other directives

MiCA does not extend to DAOs, DeFi platforms, or dApps (or other decentralized applications) that are fully or genuinely decentralized. However, since decentralization remains a subjective and nuanced concept with varying degrees, we strongly advise projects operating decentralized applications—especially those providing interfaces to EU-based users—to seek qualified legal guidance on MiCA’s applicability. Explore insights on progressive decentralization, applying a “decentralization test” to your project, and understanding governance minimization as a pathway to achieving full or sufficient decentralization.

What are the key points of MiCA Regulation?

EU regulation on markets in crypto assets MICA introduces critical new rules that will impact both existing and planned crypto projects..

Cross-border provision of crypto-asset services

Under MiCA, individual national crypto licensing regimes will be replaced by a unified authorization framework applicable across all 27 EU member states. Once a Crypto-Asset Service Provider (CASP) is authorized in its home Member State, it will be able to operate seamlessly throughout the entire EU. This regulation simplifies market access, enabling regional crypto businesses to serve the EU market without the need to obtain separate licenses for each member state.

CASPs will have more obligations and disclosures

Under MiCA regulation 2025, crypto-asset service providers — legal persons or organizations whose primary business is providing professional crypto asset services—must obtain authorization to operate in the EU. These services include:

providing custody and administration of crypto-assets on behalf of clients;
operation of a trading platform for crypto-assets;
exchange of crypto-assets for funds;
exchange of crypto-assets for other crypto-assets;
execution of orders for crypto-assets on behalf of clients;
placing of crypto-assets;
reception and transmission of orders for crypto-assets on behalf of clients;
providing advice on crypto-assets;
providing portfolio management on crypto-assets;
providing transfer services for crypto-assets on behalf of clients;
custody and administration of crypto assets on behalf of third parties, operating trading platforms, executing orders, and providing exchange services between crypto assets and fiat currencies.

MiCA establishes detailed rules for crypto-asset services, addressing governance, capital requirements, custody, and administration. To secure authorization, Crypto-Asset Service Providers (CASPs) must appoint at least one EU-based director and maintain a registered office within the EU. Once authorized, CASPs can passport their services across all EU member states. However, non-EU providers are restricted to reverse solicitation when offering crypto services to EU residents.

CASPs that have an average annual number of active EU users surpass 15 million will be automatically classified as sCASPS (significant CASPs). sCASPs will face heightened supervision and monitoring from relevant National Competent Authorities.

In summary, the key new requirements for CASPs under MiCA will include:

Having at least one director resident in the EU
Having a physical office and place of effective management in the EU.
Capital from 50,000 to 150,000 euros depending on the type of services provided. For example, to provide a crypto exchange service, the authorized capital is 125,000 euros.
Requirements for the presence of a number of policies and processes (Business Continuity Plan, Internal Control System, Conflict of Interest Policy, Pricing Policy, Complaint Handling Policy, Execution Policy, Pricing Policy, etc.)

These requirements to CASPs came into force on December 30, 2024.

The only exception is for existing companies that are already operating as CASPs before December 30, 2024, who may benefit from a transitional period.

The transitional period allows these companies to continue their operations while their license application, under the new MiCA rules, is being processed by the authorities. It is essential that such applications be submitted within the allowed transitional period to remain compliant. While MiCA sets a general framework, each Member State has the discretion to define its own transitional period duration, ranging from 0 to 18 months.

More rules for token issuance processes

Web3 founders planning to issue tokens (crypto assets that do not fall within the scope of EMTs or ARTs) will be required to publish a whitepaper and have a legal entity that issues tokens and operates them in accordance with the whitepaper. The project won’t need authorization to issue their assets, as their published whitepaper will serve as prospectuses that offer prospective buyers more details on the asset’s characteristics.

This means that it won’t be possible to anonymously issue tokens through decentralized token generation events (TGEs) with non-custodial treasuries or Initial Exchange Offerings (IEOs) or Initial DEX Offerings (IDOs).

However, token offerings to fewer than 150 people, or that has a total consideration over a 12-month period that doesn’t exceed EUR 1 million, or that are addressed to qualified investors only may be exempt from this requirement. If a token doesn’t have an issuer, such as BTC, the whitepaper prepared by the exchange must warn users of the potential risks of the token and the exchange will bear all the responsibility for this token. To help issuers and exchanges, MiCA outlines what the whitepapers should look like (find the full guidance in Title II, Article 6 of MiCA). This has helped clarify existing rules that were somewhat vague and unclear. MiCA also provides retail holders a 14-day withdrawal window for assets not yet traded on platforms at the time of purchase.

What is the MiCA Crypto Alliance?

The DLT Science Foundation (DFS) has announced the formation of the MiCA Crypto Alliance, an industry group formed to “streamline and enhance” compliance with the European Union’s Markets in Crypto-Assets (MiCA) regulation.

Launched on September 18, 2024, the MiCA Crypto Alliance was established by the DFS, a knowledge-sharing collaboration between academia, industry, developers and government to advance distributed ledger technology (the decentralized system for recording and sharing data across multiple locations that is the underlying technology of blockchain), in partnership with digital asset companies Hedera, Aptos Foundation and Ripple.

The alliance aims to foster cooperation between firms attempting to navigate the new and impeding obligations of the EU’s landmark MiCA regulation.

The regulation for CASPs will set strict disclosure obligations, including expecting centralized exchanges and digital asset firms to disclose the climate impact of operations through white papers and online descriptions accessible to the public.

The alliance will provide members with “exclusive access to advanced tools and resources for sustainability assessment and white paper development,” which includes launching standardized templates for sustainability disclosures to help CASPs and regulated entities comply with the regulation.

Members will have access to compliance tools, expert advice, and networking opportunities. Hedera will contribute expertise in sustainability metrics, Ripple will focus on regulatory compliance through transparency, and Aptos Foundation will support blockchain security and scalability. The DSF will offer exclusive tools and resources to assist members in meeting MiCA requirements and promoting high standards of compliance and sustainability within the industry.

Predictions and challenges for 2025

Crypto regulation news: the European crypto market is undergoing a significant transformation as the MICA takes center stage. This comprehensive framework is designed to enhance transparency, strengthen anti-money laundering (AML) measures, and improve consumer protection, setting a new standard for the industry. However, with the 2025 compliance deadline fast approaching, concerns are growing over the market’s readiness.

MICA Regulation Summary: Recent reports indicate that fewer than 5% of crypto businesses in countries such as Poland, Czechia, and the Baltics are fully prepared, putting many at risk of non-compliance.

While jurisdictions like Malta, France, and Liechtenstein benefit from existing regulations closely aligned with MiCA, others face more significant challenges. For instance, Poland must harmonize its relatively lenient regulatory framework to meet MiCA’s standards, which could affect over 1,500 registered Virtual Asset Service Providers (VASPs). Meanwhile, Estonia has emerged as a proactive leader, with fewer firms requiring major adjustments due to its already stringent crypto regulations. This uneven readiness highlights the need for a coordinated effort across Europe.

For crypto companies, compliance with MiCA is no longer optional—it’s essential. Non-compliance could result in losing access to the EU market or even operational shutdowns, particularly for smaller firms. However, aligning with MiCA also presents opportunities, including increased consumer trust and a competitive edge. Companies like Kyrrex are stepping in to support the transition, offering sublicensing solutions and advanced regulatory tools to ease the compliance process.

As the deadline approaches, the industry’s ability to adapt will determine its success under MiCA. For Europe’s crypto market, this moment represents more than just regulatory survival—it’s an opportunity to thrive in a landscape driven by transparency, innovation, and trust.