European countries delay crypto laws in a race against MiCA – DL News

The European Union’s crypto sector is being overhauled.

Countries across the 27-nation bloc are preparing for the new regulation of markets in crypto-assets, or MiCA, which will change the rules for the industry forever.

In February, Poland became the latest nation to introduce laws to start a new regime for the 1,187 businesses registered there.

The transition begins

The overhaul marks the start of its transition to comply with the bloc’s new rules for virtual asset service providers, or VASPs, by the end of 2024.

“This law fills in all those details that are necessary for MiCA to function in Poland and for cryptoasset service providers to be able to comply,” Jarosław Nowacki, partner and founder of law firm tau.legal, told DL News.

The Czech Republic, Poland and Lithuania have the most crypto outfits registered with local financial authorities, according to data collected by DL News.

Cheap, fast and easy registrations have allowed numerous firms to set up shop, even if some are not physically present in these countries.

However, MiCA could put an end to the party as the landmark regulation sets stricter standards for firms offering crypto products.

On the plus side, it would also allow firms to access the entire EU market with a license from a single member state.

Czech VASPs

The Czech Republic leads the charts with 9,372 individuals and firms registered, according to figures last updated in May 2023.

Czech authorities did not respond to DL News’ repeated requests for updated data. There is no online registry.

Both the Czech Republic and Poland allow individuals to register as VASPs.

“They have a fair amount of work to do as their existing anti-money laundering regime is quite light touch.”

— Neil Samtani, CEO of VASPnet

While Poland is progressing towards MiCA implementation, the Czech Republic’s roadmap is less complete.

“The Czech Republic has a lot of work ahead of them with a large number of existing registrants to process and little to report so far on progress made with MiCA,” said Neil Samtani, CEO of VASPnet, a firm that analyzes data on VASPs , told DL. News.

Capital requirements

Lithuania comes in third with 569 entities registered.

“Unlike Poland or Czech Republic, registrants are mostly companies, not natural persons, and this is probably due to the minimum share capital requirements of €125,000,” said Samtani.

Lithuania announced it would tighten national laws on crypto in December, when authorities published draft laws that would overtake MiCA.

“They have a fair amount of work to do given their existing [anti-money laundering] regime is quite light touch and only involves a notification process,” said Samtani.

Price tag

One of the ways these countries have been able to attract more crypto entities to register is by offering cheap and efficient registration.

In the Czech Republic, it costs around €40 to notify the regulator, in contrast to Italy, where companies can expect to cough up €8,300 for a registration.

In Poland, the new draft law suggests that it will cost a crypto business a minimum of €4,500 to be licensed under MiCA, Nowacki said.

Currently, it only takes two weeks and less than €150 in fees to register as a VASP in Poland.

New regimes

France is among the top five countries in the European Union when it comes to the development of the crypto market. There are 103 registered VASPs listed in France.

The country also leads the EU in MiCA implementation. In July, the country put a MiCA-like regime in place for new market entrants.

Still, there is a long way to go until the industry gets on board, and the clock is ticking.

Société Générale’s digital assets arm, SG Forge, is the only business in France authorized under the country’s stricter MiCA-like regime.

Meanwhile, 129 entities are registered in Italy.

“Italy currently has open consultations on their implementation of MiCA, which indicates that they have done most of the work, and we are unlikely to see many changes to their proposed regime,” Samtani said.

Transition phase

Under MiCA, countries in Europe can choose to extend the deadline for companies already registered to comply with the new laws by up to 18 months.

Still, the European Securities and Markets Authority, which is overseeing part of MiCA’s implementation, warned against taking more than 12 months.

Lithuania decided to scrap the transition period and for MiCA laws to come into force on 30 December. And Italy recently announced a 10-month transition.

Poland will give registered companies an extra year, Nowacki said.

“After the end of 2025, this current registry will cease to exist,” he told DL News. “Prior to that, firms can operate on the basis of the current registration.”

But Poland’s registry could shrink before the 2025 deadline, Nowacki said.

If a VASP fails to submit a quarterly data report to Poland’s financial intelligence unit, or if a business fails to respond to an audit request from regulators, it can be struck off the CASP register.

Inbar Preiss is DL News’ Brussels correspondent. Contact the author at [email protected]. Ana Ćurić is a data journalist. Contact her at [email protected].