With the Markets in Crypto Assets Regulation (MiCAR), the European venue has become much more attractive to the global crypto industry. In future, crypto asset service providers (CASP) will find uniform regulation for their business in the member states of the European Union, which clarifies that crypto services are legal in Europe and in which form. In addition, MiCAR offers European crypto asset service providers the opportunity to provide their crypto services throughout the European Union on the basis of just one MiCAR license from their competent authority which in Germany is BaFin. These options and the legal certainty associated with MiCAR are also of interest to CASP from the USA, Asia or other third countries such as Switzerland and the UK. Crypto asset service providers from these countries are therefore increasingly interested in how they too can benefit from MiCAR regulation and how an expansion into Europe can be structured in terms of supervisory law. Applying for their own MiCAR license from BaFin is the most obvious solution in this respect and offers the advantage of maximum freedom in terms of their own business organization. However, the expected very long processing time until a BaFin license is issued by the authority is problematic. Alternatives for expansion into Europe for non-European CASP could be cooperation with companies supervised under MiCAR or the acquisition of an already licensed CASP.
Cooperation with Licensed Crypto Asset Service Provider as an Alternative to an Own MiCAR License
One way for companies from a non-European country to expand into Europe may be to enter into a cooperation agreement with an EU company licensed for the intended crypto services. In practice, in many cases, arrangements are possible whereby the foreign company is included in the business organization of a CASP licensed by BaFin by way of an outsourcing agreement. The supervised crypto asset service provider is then responsible under supervisory law, while the company from the third country merely acts as a service provider for the licensed company from a regulatory point of view. Fronting and customer support can then be provided by the foreign company, for example. However, it must always be ensured that customers can recognize that the company with a BaFin license assumes civil and regulatory responsibility for the crypto services offered via the cooperation.
Acquisition of a Crypto Asset Service Provider with BaFin License Requires BaFin Acquisition Approval
Another alternative for crypto asset service providers from third countries may be to acquire a company in Europe that already has a BaFin license to provide the intended crypto services. Not only CASPs with a MiCAR license are eligible. Depending on the type of crypto services planned, certain investment firms with a BaFin license may also be considered as possible target companies. Similarly, under MiCAR, credit institutions are generally permitted to offer crypto services in addition to their actual business activities. In all these cases, however, a successful BaFin approval procedure must be completed prior to the acquisition. As part of the BaFin approval procedure, the authority has the opportunity to check the reliability of the acquirers interested in the acquisition and their intentions with regard to the acquisition. The information and evidence to be made available to BaFin during the BaFin approval procedure are numerous. Nevertheless, an approval procedure generally takes considerably less time than applying for a BaFin license. In this respect, acquiring a company supervised in Germany is a very interesting alternative for crypto asset service providers from third countries looking to expand into Europe.
Attorney Lutz Auffenberg, LL.M. (London)
The competent lawyer for questions regarding a BaFin license under MiCAR, outsourcing and BaFin approval procedures in our law firm is Attorney Lutz Auffenberg, LL.M. (London).
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