CASP Licensing in Europe and Offshore
As the cryptocurrency industry grows, the demand for compliance and regulatory adherence becomes critical for businesses offering crypto-related services. A Crypto-Asset Service Provider (CASP) License allows companies to legally operate in trading, custody, issuance, and advisory roles for crypto-assets. At BankMyCapital, we help businesses navigate the complexities of licensing, ensuring compliance with both the forthcoming Markets in Crypto-Assets Regulation (MiCA) in the EU and offshore regulatory frameworks.
What is a CASP License?
A CASP License authorizes businesses to operate legally in the cryptocurrency sector, ensuring adherence to anti-money laundering (AML), counter-terrorism financing (CTF), and consumer protection regulations. The license covers various services such as:
•Crypto trading and exchanges.
•Custody and safekeeping of crypto-assets.
•Issuance of crypto-assets and stablecoins.
•Advisory and payment services related to cryptocurrencies.
CASP Licensing in Europe: MiCA and Unified Standards
The Markets in Crypto-Assets Regulation (MiCA) establishes a harmonized regulatory framework for CASPs across the EU. It aims to create a level playing field for crypto businesses, enhance consumer protection, and strengthen financial stability.
Key Features of MiCA for CASPs
1.Passporting Across the EU:
•A CASP license issued in one EU member state allows operations throughout the European Economic Area (EEA), reducing the need for multiple licenses.
2.Capital Requirements:
•MiCA specifies minimum capital thresholds based on the services offered:
•€50,000: For crypto-to-crypto exchanges or custody services without fiat involvement.
•€125,000: For crypto-to-fiat trading services.
•€150,000: For stablecoin issuers and other asset-referenced tokens.
3.AML and KYC Compliance:
•CASPs must implement stringent AML/KYC measures to prevent illicit activities.
4.Consumer Protection:
•Businesses must disclose detailed information about services and associated risks.
5.Operational and Financial Requirements:
•CASPs must maintain adequate capital reserves and have robust internal controls.
6.Director and Compliance Requirements:
•At least one director must reside in the EU.
•A Money Laundering Reporting Officer (MLRO) is mandatory for oversight of compliance.
Popular EU Jurisdictions for CASP Licensing
1. Estonia
•Capital Requirement: €250,000 (for full CASP operations).
•Directors: Minimum of one; non-residents allowed, but a local compliance officer is mandatory.
•MLRO: Required, with a local presence.
•Key Features:
•Known for its e-residency program and strong digital infrastructure.
•Offers an efficient licensing process.
•Highly compliant with EU AML and KYC standards.
•Ideal For: Startups and tech-driven crypto businesses.
2. Lithuania
•Capital Requirement: €125,000 for CASPs offering crypto-to-fiat services.
•Directors: Minimum of one; foreign nationals allowed if they meet fit-and-proper criteria.
•MLRO: Required, and must reside in Lithuania.
•Key Features:
•Streamlined licensing and cost-effective entry into the EU market.
•Strong support for fintech and crypto companies.
•Ideal For: Small to medium-sized crypto businesses.
3. Poland
•Capital Requirement Under MiCA: Between €50,000 and €150,000 depending on the type of CASP services.
•Directors: Non-resident directors allowed; a compliance officer is mandatory.
•MLRO: Required for overseeing AML compliance.
•Key Features:
•Poland is crypto-friendly, with a supportive regulatory environment.
•While there’s no minimum capital requirement under the current framework, MiCA will standardize thresholds across the EU.
•Ideal For: New crypto businesses aiming for affordable entry into the EU market.
4. Malta
•Capital Requirement: €730,000 for a Virtual Financial Asset (VFA) license.
•Directors: At least three directors, with one residing locally.
•MLRO: Mandatory, with a local presence.
•Key Features:
•Comprehensive regulatory framework under the Malta Financial Services Authority (MFSA).
•Known as “Blockchain Island” for its progressive crypto regulations.
•Ideal For: Established businesses seeking credibility and high compliance standards.
Offshore Jurisdictions for CASP Licensing
Offshore jurisdictions provide cost-effective and less burdensome regulatory environments, making them attractive for startups or businesses targeting non-EU markets.
1. Seychelles
•Capital Requirement: Flexible and minimal.
•Directors: At least one; no local residency required.
•MLRO: Recommended but not mandatory.
•Key Features:
•Quick and cost-effective licensing process.
•Suitable for smaller operations.
•Ideal For: Startups entering global markets.
2. Cayman Islands
•Capital Requirement: Determined by business scope; generally low.
•Directors: At least one; no local residency required.
•MLRO: Required, emphasizing AML compliance.
•Key Features:
•Globally recognized for financial services.
•Flexible licensing options.
•Ideal For: Medium to large-scale crypto operations.
3. Vanuatu
•Capital Requirement: $50,000–$100,000 depending on business type.
•Directors: No local residency required; at least one director needed.
•MLRO: Not mandatory but recommended.
•Key Features:
•Fast and cost-effective licensing process.
•Suitable for businesses targeting emerging markets.
•Ideal For: Cost-sensitive startups.
Choosing Between Europe and Offshore
When choosing between Europe under MiCA and offshore jurisdictions for CASP licensing, there are distinct differences to consider:
European jurisdictions offer high regulatory standards with a strong emphasis on AML and KYC compliance. This ensures that businesses licensed in the EU gain global trust and credibility. One of the key advantages of licensing under MiCA is the ability to operate across the entire EU through passporting rights, making it an attractive option for businesses targeting the European market. However, the cost of compliance and operational expenses in Europe tends to be higher, and the licensing process is more complex.
In contrast, offshore jurisdictions provide a more cost-effective solution with lower setup and maintenance costs. These jurisdictions often have moderate to minimal compliance requirements, which can make the process faster and simpler for startups or businesses with limited resources. However, offshore licenses may face limitations in market access and carry less prestige compared to their European counterparts, which can impact partnerships or consumer trust in highly regulated markets.
Selecting between these options depends on your business’s goals, budget, and target market. European licenses are ideal for businesses prioritizing reputation and access to the EU market, while offshore options suit those seeking affordability and operational flexibility.
Why Choose BankMyCapital?
At BankMyCapital, we provide comprehensive support for securing a CASP license, tailored to your business needs. Whether navigating MiCA in Europe or exploring offshore jurisdictions, we ensure your success.
Our Services Include:
1.Jurisdiction Selection: Expert analysis to recommend the best licensing option.
2.Document Preparation: Assistance with AML/KYC policies, business plans, and financial statements.
3.Regulatory Guidance: Step-by-step support through compliance processes.
4.Application Management: End-to-end handling of licensing applications.
5.Bank Account Assistance: Guidance on opening accounts in crypto-friendly jurisdictions.
Get Started Today
Whether you’re targeting Europe’s harmonized crypto market or seeking cost-effective offshore solutions, BankMyCapital ensures a seamless licensing journey. Contact us today to start your CASP licensing process and unlock global opportunities in the crypto market.