MiCAR License

MiCAR License Application for Crypto Asset Service Providers

With the Markets in Crypto Assets Regulation (MiCAR), the European Union created a uniform regulatory regime for the professional handling of crypto assets that applies to the entire European crypto market. Crypto asset service providers from both the EU and non-European third countries who wish to offer crypto asset services to EU citizens are required to obtain an authorization from the respective national competent authority in accordance with Art. 59 et seq. MiCAR for their European business since MiCAR came into effect. In Germany, it is therefore required to obtain a BaFin license in accordance with the MiCAR regulation. The licensing requirement applies, among others, to crypto custodians and operators of crypto asset exchange platforms, providers of crypto trading services or of advisory services relating to investments in crypto assets, and asset managers who are also considering investments in crypto assets for their clients. Crypto asset services are therfore regulated uniformly throughout Europe since MiCAR came into effect, which opens up great opportunities for the European single market in the area of crypto assets and also breaks down barriers.

BaFin License for Investment Services as an Alternative to a MiCAR License

Depending on the business model, authorization pursuant to Art. 59 et seq. MiCAR may not be required in individual cases, instead an authorization pursuant to Section 15 (1) WpIG has to be obtained in these cases. This is particularly relevant if and when the specific business model of a company relates to crypto tokens, but those are classified as financial instruments within the meaning of MiFID regulation. In this case, Art. 2 (4) MiCAR stipulates that the instrument should not be subject to MiCAR but to the regulations applicable to securities institutions. In addition, securities institutions with permission pursuant to Section 15 (1) WpIG have the advantage that they do not require an additional license under MiCAR for services relating to crypto assets if they already possess a BaFin license pursuant to the WpIG, which allows them to provide the relevant services relating to traditional financial instruments. In this respect, it is not necessary to apply for full MiCAR authorization, but only to undergo a so-called notification procedure, in which information must be provided to the competent supervisory authority regarding future planned transactions with crypto assets and compliance with the then applicable MiCAR regulations. A specialist lawyer or law firm in crypto regulation can provide helpful support to crypto asset service providers in such projects.

Passporting of a BaFin License Possible under MiCAR and under WpIG

Both a BaFin license under MiCAR and under WpIG can be used by ways of EU passporting. A license granted by BaFin can therefore be used not only for business operations in Germany, but also for approaching clients in other member states of the European Union. To benefit from passporting, crypto asset service providers merely have to go through a comparatively simple notification procedure. To do so, they simply need to notify BaFin in which other EU country or countries they intend to provide the services they are licensed to provide. BaFin will then, in turn, inform the competent supervision authorities in the countries concerned. Subsequently, the crypto asset service provider can also address customers and take marketing measures in the target country without requiring additional authorization as a crypto asset service provider or as an investment firm by the supervision authority in the target country.

The competent lawyer for questions regarding MiCAR License in our law firm is Attorney Dr. Lutz Auffenberg, LL.M (London).