The Markets in Crypto-Assets Regulation (MiCAr)
What is the Markets in Crypto-Assets Regulation?
The European Parliament approved the Markets in Crypto-Assets Regulation (MiCAR) in April 2023. MiCAR entered into full force on 30 December 2024 with specific provisions applicable from 30 June 2024. MiCAR regulates the issuance, distribution and trading of crypto-assets, as well as the provision of crypto-asset services, and therefore had significant implications for any business involved in these activities.
MiCAR provides a harmonised regulatory framework for crypto-assets at European level, that was previously not covered by existing EU financial law.
Its objectives include:
- The provision of greater legal certainty
- Adequate consumer and investor protection
- Market stability for cryptocurrency companies and investors, and
- The imposition of regulatory oversight over crypto-asset service providers (CASPs)
What is the scope of MiCAR?
MiCAR applies to persons engaged in the issuance, offer to the public and admission to trading of crypto-assets, or persons that provide services related to crypto-assets in the EU.
What are the key features of MiCA?
- MiCAR provides for categories of crypto-assets based on how they stabilise their value, namely e-money tokens (EMTs), asset-referenced tokens (ARTs) and other crypto assets such as utility tokens.
- MiCAR sets out requirements for the offering and admitting to trading of these categories of crypto-assets, including for example transparency and disclosure requirements and measures to prevent market abuse.
- For EMT and ART issuers, there are now restrictions for investment of reserves and the expectation of robust governance, including business continuity, control and risk assessment, and appropriate 3rd party contractual arrangements.
- MiCAR has also introduced an authorisation regime for CASPs, who must apply to the state where their registered office is located to passport their services within the EU.
- A CASP is a legal person, or other undertaking, whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis.
- MiCAR has imposed important consumer protection measures on CASPs, with governance obligations, minimum capital requirements, and transparency requirements. MiCAR also provides for prohibitions on insider dealing, market manipulation and the unlawful disclosure of inside information.
- There are 10 crypto-asset services, including exchange services, transfer services, custody services and MiFID-like services e.g., portfolio management of crypto-assets and execution of orders for crypto-assets on behalf of clients.
- In terms of regulated products, fully decentralized, unbacked assets are not included in MiCAR’s issuer/product framework. According to the Central Bank of Ireland (CBI), they lack a central governance structure to engage with as well as not having an underpinning value. The CBI is sceptical of unbacked crypto assets that have no utility and are heavily marketed for speculation to retail consumers.
When did MiCAR come into force?
The first phase of MiCAR entered into force in June 2024 and deals with stablecoins. The second phase, which entered into force in December 2024, deals with CASPs.
Any business providing their services in Ireland in accordance with the domestic VASP regime before 30 December 2024 could continue to do so until 31 December 2025, provided that they availed of the transitional period under MiCAR. After 31 December 2025, Irish VASPs providing the crypto services mentioned below must hold a CASP authorisation under MiCAR or cease providing VASP services.
Any firm providing crypto-asset services in Ireland after December 2025 must be authorised in accordance with MiCAR as a CASP or obtain such authorisation elsewhere in the EU and passport this authorisation into Ireland.
CASP authorisation process
Applicant firms seeking authorisation as a CASP must clearly demonstrate that they can meet their regulatory obligations and the CBI’s supervisory expectations. The CBI has published general engagement principles and its high-level authorisation expectations. Generally speaking, the CBI’s approach to regulation is underscored by a consumer and investor protection rationale. Consequently, the higher the risk related to the products offered by an applicant firm, the higher the CBI’s expectations will be regarding the firm’s ability to manage those risks.
The CBI’s supervisory expectations for CASPs include:
- Transparency: a firm must act in a fully transparent manner with respect to its proposed application MiCAR strategy.
- Governance and supervisability: a firm must be able to demonstrate an appropriate level of substance and autonomy in Ireland, with the board of directors led by a local crypto-competent executive with a strong grasp of the local regulatory environment.
- Conflicts of interest: a firm must be able to demonstrate that no risks will be posed to the interests of customers due to conflict of interests. It is incumbent on firms to design and implement a robust system that will proactively identify and subsequently remedy any conflicts.
- Client assets: a firm must be able to outline how a crypto asset is backed by an underlying asset. Firms must also have full control of all client assets, with segregation and reconciliation processes and procedures in place, as well as prompt access to the reserve of assets to meet redemption demands.
- Business model and financial resilience: CASPS must maintain a board-approved business strategy that demonstrates the viability and sustainability of the business model. This strategy should fully account for vulnerabilities stemming from the product offering.
- Anti money laundering (AML): A firm must always know who its customers are and how they are funding their crypto activities, so as to maintain compliance with Irish AML legislation.
- Crisis management: A firm shall maintain a comprehensive plan that will enable an orderly winding down of its activities and timely redemption of customer funds.
The full process for a CASP application will be dependent on the nature, scale and complexity of the firm and the extent of preparedness of the applicant. The CBI has indicated that, in its experience, the best-prepared firms which are willing to engage transparently in the authorisation process proceed through the process more efficiently.
As of October 2026, 12 CASPs have been authorised by the CBI.
What is the impact of MiCA?
It is hoped that increased regulatory oversight and the imposition of a harmonised regulatory framework for crypto-assets across the EU is helping to restore consumer confidence in the crypto-market by mitigating risk and uncertainty in the sector. While it presents regulatory and compliance hurdles, MiCAR also offers greater certainty and a clearer path forward for firms operating in this space.
Read the full legislation here.
We have extensive experience advising crypto operators and we advise firms who are interested in applying for authorisation under MiCAR. Please reach out to a member of our team should you require advice and support in this area.
