What is the Markets in Crypto-Assets Regulation (MiCA)?
MiCA: A New Chapter for Crypto. A 2025 Update.
Crypto, once the unruly rebel of the financial sector, has received the ultimate introduction to the establishment club with its very own EU rule book: Markets in Crypto-Assets Regulation (MICA).Having come into force on 30 December 2024, MICA brings additional nomenclature, as well as compliance requirements to the crypto sector - CASPs need licences from a national competent authority, ARTs are distinguished from EMTs, and Titles are as important as ever.From a practical perspective, MICA means that from 2025, digital platforms active in the European Union need to comply with the same sort of AML, KYC, and custody and segregation regulations that are typically associated with legacy banks like BNP Paribas, Santander, and HSBC. During the transitional period, certain service providers may be required to meet compliance gradually as they adapt to the new regulatory framework.MICA also adds some clarity - in Europe at least - over whether certain crypto-assets are securities or not, particularly in the context of trading platforms that facilitate their exchange. The regulation also emphasizes the importance of distributed ledger technology (DLT) in ensuring secure and transparent recording of digital asset transactions including those involving non-fungible tokens (NFTs), on trading platforms.The trading bloc unveiled MICA in September 2020, then the European Parliament passed it into law in April 2023. And while MICA officially comes into force at the end of this year its impact was first felt in June 2024 with the regulation of stablecoins.
What is Markets in Crypto-Assets Regulation (MICA)?
But what actually is MICA? MICA is an EU regulatory framework for crypto assets and includes provisions for entities issuing and trading crypto assets such as asset-referenced tokens (ARTs) and e-money tokens (EMTs).The EU’s digital asset rule set is intended to support global regulators' post-2008 Financial Crisis priorities of market integrity and financial stability by regulating public crypto trading and by ensuring consumers are better informed about the risks involved in the digital asset sector, in coordination with the central bank policies.What is the Purpose of the MICA Regulation?
MICA emerged ahead of the crypto bull run 2021 which saw Bitcoin soar to a then all-time high of $69,000 in May that year amid a flurry of NFT and meme coin launches, highlighting the need for enhanced consumer protection in the sector.The subsequent price crash and crypto winter, which saw the bankruptcy of the exchanges FTX and Celsius, and the loss of tens of billions of dollars of customer assets, however, highlighted the need for a digital asset regulatory framework.In addition to setting out rules on the trading, preventing market abuse, inside information, and market manipulation, and issuing various types of digital assets, the increased focus on transparency under MICA is intended to combat money laundering and terrorist financing, according to the EU Council, which defines the trading bloc’s legislative strategy including for investment firms.MICA will protect investors by increasing transparency and putting in place a comprehensive framework for issuers and service providers, including compliance with the anti-money laundering rules."This regulatory framework aims to protect investors, preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector,” the EU Council said when the framework was passed into law in 2023.What are the Key Points of MiCA?
The first stage of MICA came ahead of its 30 December 2024 start date, with the introduction of the EU’s stablecoin regulatory framework in June that year. The next compliance step for digital asset players in the EU is the 30 December enforcement of the Transfer of Funds Regulation (TFR), which also sets standards for transfer services in the crypto sector."MiCA’s first stage, ahead of its 30 December start date, mirrors some aspects of MiFID II by focusing on compliance and investor protection, as seen in the EU’s stablecoin regulatory framework introduced in June."The TFR enforces the trading bloc’s Crypto Travel Rule, which is aimed at combating money laundering and terrorist financing. Starting from January 2025, Crypto Asset Service Providers (CASPs) must apply for a license to operate in the EU, ensuring they meet standards similar to those applied to traditional financial instruments. CASPs must ensure the information accompanying transfers meets the new regulatory requirements set out under the Transfer of Funds Regulation (TFR).CASPs must have reached full compliance with MICA standards on issues like data and asset segregation by July 2026.Some key components of MiCA include:
Consumer and Investor Protection & TransparencyMiCA has the goal of protecting consumers and investors by covering issuers and service providers while guaranteeing financial stability and supporting innovation.MiCA’s disclosure and transparency rules require crypto asset issuers to provide transparent details about the crypto assets they administer.
AuthorizationCrypto asset issuers and service providers must meet certain conditions to be authorized. These include capital requirements, risk management systems, governance arrangements, and adequate cybersecurity measures. They must also obtain authorization from an authority in their home member state.
StablecoinsMiCA introduces additional requirements for stablecoins, such as compulsory reserve mechanisms and regulations for significant asset-referenced tokens.
Cross-border PassportA cross-border passport will allow authorized entities to provide services in other EU member states without needing separate authorizations.
SupervisionMiCA establishes a blueprint for cooperated supervision amongst national authorities to make sure crypto-asset markets are constantly regulated.
Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)MiCA incorporates the current EU AML/CFT framework, which requires the registration of certain cryptoasset service providers.
Market Abuse and Insider TradingMiCA introduces criteria to crack down on market abuse, such as prohibitions on insider trading and the manipulation of crypto asset prices.
Environmental RegulationMiCA requires significant service providers to disclose their energy consumption in an attempt to reduce the large carbon emissions of cryptocurrencies.
FAQ about MiCA
On 30 June 2024, the EU brought in its stablecoin rule book which limited issuance of digital token that referenced a single fiat currency to credit institutions and e-money institutions.Issuing stablecoins that reference multiple fiat currencies or other underlying assets (asset-referenced tokens, or ARTs) is restricted to legal persons like credit institutions and firms that obtain specific sign-offs.“MICA will change how issuers engage with token-holders. Issuers of regulated stablecoins will have to meet specific requirements on transparency, asset reserves, and risk management that are derived from existing legislation for traditional financial services.EMTs, which are commonly used to substitute for cash in digital exchanges, will be deemed a form of e-money under EU rules.With these developments, investors should gain comfort that they can redeem regulated stablecoins for official currencies. In turn, that should promote market stability and liquidity,” law firm Ashurst said.
The exact impact of MICA on the crypto sector will be evaluated in the long term, that said the emergence of a regulatory framework in one of the world’s most important economies demonstrates the maturity of the crypto-asset market. Once published in the Official Journal, MiCA will officially become law, ensuring its provisions are legally binding across the EU.Crypto players have complained about the KYC and AML requirements in the Travel Rule but the digital identity trail this brings to the European market has distinct advantages for the sector.This greater level of transparency means that European financial services firms such as banks and asset managers will now find it much easier to gain compliance approval for crypto related activities.This, in turn, should boost liquidity to the European crypto sector, while institutional investors are generally viewed as less volatile and longer term thinking than their retail peers.
Title III and Title IV are sections of the Markets in Crypto-Assets Regulation (MICA). Title IV refers to electronic money tokens (EMTs under EU regulatory jargon), such as Tether (USDT) and Circle (USDC), PayPal, and Amazon Pay.Title III rules cover Asset Referenced Tokens (ARTs) which are crypto-tokens that are not EMTs and look to reference either multiple currencies, such as Facebook’s maligned Libra token, or commodities such as Tether Gold. ARTs can also reference multiple underlyings from different asset classes.
Operators of digital asset exchanges in the EU have multiple issues to consider from the impending implementation of MICA. The new rules for the operation of a crypto-asset exchange, how these assets are exchanged for funds, their custody and administration, as well as pre and post-trade execution rules, will be enforced starting in 2025.
While some technical standards and guidelines for Asset-Referenced Tokens (ARTs) are still being refined by the European Banking Authority (EBA), the primary regulatory framework for ARTs under MiCA is already established and will come into full effect on 30 December 2024.Areas covered by Title IV include issuer location requirements, a robust white paper, reporting and governance standards, and a rule set for ARTs which authorities deem ‘significant.’
The European Commission defines e-money tokens – known as EMTs under MICA - as:“An e-money token is a crypto-asset designed to maintain a stable value by referring to one currency, while asset-referenced tokens are crypto-assets that seek to maintain a stable value by referring to several currencies, commodities or other crypto-assets, or a combination of such assets,” it said in an overview of the trading bloc’s crypto asset regulation framework.What this means in practice is that PayPal is a form of e-money, but Bitcoin isn’t.This may sound counterintuitive but crypto generally, is not e-money. While all crypto is digital money the reverse is not true and what distinguishes crypto currencies is their value is intangible and not linked to a fiat currency.Whereas although PayPal deals in pounds, dollars, euros, users ‘buy’ a specific amount of money which is then transmitted electronically before being converted into a fiat end currency by the recipient.Issuers of e-money tokens must be authorised as either a credit institution or as an electronic money institution (EMI).
According to UK investment advisory firm Saxe Global, the roll-out of MICA at the end of this year may spark a welcome round of regulatory convergence over digital among the EU 27 member states, which currently take divergent approaches on critical issues such as taxation, and legal frameworks.“MICA's introduction, much like MiFID II for traditional financial assets, is expected to harmonize the regulation of various crypto-assets, including EMTs and utility tokens, across EU member states. This unified approach will reduce regulatory fragmentation and promote a level playing field for market participants, "Saxe Global said in comment when the regulation was given parliamentary approval.
MICA provides a new licensing regime for crypto-asset service providers (CASPs) and crypto-asset issuers. CASPs are simply new or existing businesses that offer certain crypto-asset services to clients on a professional basis.
In addition to the MICA framework regulating all forms of crypto assets it also sets out a rule set for all crypto-asset service providers (CASPs) operating within the European crypto industry. The regulation also applies to any CASP serving European interests, regardless of where the provider is located.There are five service areas that require registration under MICA:1. Custody or administration services 2. Operating an exchange 3. Investing or trading crypto-assets on behalf of others 4. Advising on crypto asset portfolio management on behalf of others 5. Payments services
Top Jurisdictions for Crypto Firms in Europe in 2025
While MICA requires CASPs be registered in the EU it doesn't stipulate which of the 27 member states a digital asset firm should locate in. And while the regulation is pan-EU it doesn’t cover business critical issues like how crypto is taxed, which is instead done at a national level.Other areas of concern for crypto firms include whether a country has a clear legal framework for crypto and this varies widely. Austria included a definition of virtual asset service providers in its 2018 Banking Act whereas in neighbouring Germany the countries legal framework only mentions digital assets firms in relation to AML requirements.Relocation firm Lincoln Partners rated Portugal as the best location in Europe for crypto, citing its favourable tax treatment of crypto investors. In Portugal private investors don’t pay capital gains taxes or income tax on their crypto assets as long as they are crypto traders for a living.Switzerland was the other European country that Lincoln Partners rated highly, the firm praised the alpine state’s decision to adopt the same capital gains tax exemption for crypto trading that it already applied to stocks and bonds.Successful crypto players will also be able to take advantage of Switzerland's special tax regime, which provides a flat annual fee regardless of income for high-net-worth individuals. It does, however, sit outside the EU.At the same time, some firms may prefer secure jurisdictions such as Finland. They are comparable in the ease of doing business to Portugal or Switzerland, and their financial regulations are known for being extra-robust and trustworthy.What is Happening Outside the EU?
The global picture over crypto regulation is mixed. China, the world’s second largest economy, banned its use completely in 2021 saying that digital currencies were linked to crime.While former President Donald Trump has expressed increasing interest in cryptocurrencies, including accepting campaign donations in crypto, there is no confirmed plan for him to launch a personal crypto platform. The regulatory landscape for digital assets in the US remains fragmented, with policies largely set at the state level rather than federally.Crypto also remains largely unregulated in the UK, with the country’s Financial Conduct Authority warning consumers on its website that crypto is high-risk.“If something goes wrong, it is unlikely you will be protected so you should be prepared to lose all your money,” the FCA said.Hong Kong is taking a more welcoming approach to crypto, in June 2023 it launched its Virtual Asset Service Providers (VASP) licensing regime, and so far the Hong Kong Securities and Finance Commissions has greenlit two firms to trade Bitcoin and Ethereum.Choose Narvi for MiCA Entities
Operating in the MiCA era means a solid digital banking setup is key. Narvi Payments provides a Nordic-designed platform that perfectly matches the needs of VASPs and CASPs.Here’s how Narvi Payments can streamline your transfers:
- Crypto provider-friendly banking. Tired of applying for business accounts, waiting for months and getting rejected? It's gonna be different with us.
- Instant SEPA payments: Our smart routing solution enables instant processing of euro transfers in the EU/EEA and switches to SWIFT for global wire transfers when required.
- Global SWIFT transfers: Your dedicated IBAN is connected to the SWIFT system. Send and receive euro payments to 100+ countries. Our customer support is happy to help with tracking both SEPA and SWIFT.
- Regulated in Finland (EU): Narvi is regulated in Finland as an Electronic Money Institution (EMI). We have passporting rights in 29 European countries, which enables us to do business worldwide.
Published July 11, 2023; Updated January 13, 2025. Sources checked November 31 2024.Author:
Aaron Woolner is a financial journalist with over a decade of experience covering banking, insurance, fintech, and regulatory topics. Having led editorial teams at prominent publications like Capital.com and Asia Risk, Aaron delivers informed and compelling insights from across Asia and Europe.Disclaimer
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
Aaron Woolner is a financial journalist with over a decade of experience covering banking, insurance, fintech, and regulatory topics. Having led editorial teams at prominent publications like Capital.com and Asia Risk, Aaron delivers informed and compelling insights from across Asia and Europe.Disclaimer
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
Read next:
Banking for Alternative Investment Funds [whitepaper]
A deep dive into alternative investment funds' (AIFs) market growth, regulatory updates, and the discussion of banking and payment needs.
Banking for Family Offices [whitepaper]
Access a 2025 overview of family funds as an industry, their unique banking and payments needs, and how neobanks like Narvi can support them.
What We Offer
Narvi Payments Oy Ab is an Authorized Electronic Money Institution (EMI). Narvi’s EMI license is granted by the Finnish Financial Supervisory Authority (FIN FSA) with the registration number 3190214-6. Narvi’s license is Passportised to all European Union countries.
Built and regulated in Finland© 2025 Narvi. All Rights Reserved.
v1.126.0