EU member states accelerate introduction of crypto legislation before MiCA deadline

The crypto sector within the 27-member European Union bloc is undergoing significant changes as countries prepare to implement the Markets in Crypto-Assets (MiCA) regulation.

The recent Bitcoin rally fuels the fire and heats up the cryptocurrency market. This is not only evidence of the growing interest and trust in digital assets, but also highlights the urgency of robust regulatory frameworks such as MiCA.

In February, Poland became the latest EU member state to introduce legislation facilitating the transition to MiCA, affecting the 1,187 companies registered within its borders. This move marks an important step towards aligning with the EU’s upcoming regulations for Virtual Asset Service Providers (VASPs), scheduled for full compliance by the end of 2024.

The transition process is a crucial phase for VASPs in the EU, with Poland, the Czech Republic and Lithuania hosting the highest number of crypto entities registered with local financial authorities. However, MiCA introduces stricter requirements for crypto product providers, while also offering the benefit of access to the entire EU market with a single member state license.

The Czech Republic has the highest number of registered individuals and companies in the crypto sector, with 9,372 registrations as of May 2023. Despite the high number, the Czech Republic’s approach to MiCA compliance remains less clear compared to Poland, which is actively working on implementing the new regulations.

Capital requirements and regulatory changes Lithuania ranks third in terms of registered entities, largely due to the €125,000 minimum share capital requirement for registrants. The country is also tightening its national crypto legislation, aiming to surpass MiCA standards with its draft laws introduced in December.

The attractiveness of these countries for crypto entities stems in part from their cost-effective and efficient registration processes. For example, the Czech Republic offers a nominal reporting fee of €40, in stark contrast to Italy’s €8,300 registration fee.

Poland’s new draft law under MiCA suggests a minimum licensing fee of €4,500 for crypto ventures, a significant increase from the current fee of less than €150 and a two-week registration process.