VASP Licence: MiCAR Deadline Is Looming. Now What?

In most of the EU, the deadline for applying is 1 July 2026 - less than a year away. You will have to wind down your European operations if you have not applied by that date.

If you are one of the 1400+ VASPs registered in Poland, your situation is further complicated by the political situation. The Presidents threat to veto key laws, including procedural rules around MiCAR implementation, means there is still no clarity on transition and no mechanism in place to secure your post-transition status.

So what happens next? How will transitioning from a VASP licence to a CASP licence impact your operations? More to the point, what are your options if you decide that a CASP licence is not right for you?

The short answer is: everything. Or, well, almost everything.

VASPs were regulated at national level, and the regime primarily focused on anti-money laundering compliance.

MiCAR, by contrast, harmonises the rules across the EU and sets far more stringent standards - around capital, operational requirements, and consumer and investor protection.

The CASP authorisation process is also much more thorough than it was for a VASP licence and can take up to 15 months.

We have written at length about MiCARs licensing and compliance requirements, so we will not repeat ourselves here. That said, here is a quick rundown of the key points:

• Minimum initial capital of EUR 50,000 for Class 1 services, EUR 125,000 for Class 2 services, and EUR 150,000 for Class 3 services
• Thorough vetting of all individuals and corporates that might exercise control over the business, including an assessment of their suitability for the role they will be carrying out
• Ongoing capital equal to the higher of your Class minimum or 25% of your fixed overheads
• At least 2 locally based individuals directing the business, as well as a local office with local staff
• Comprehensively documented policies and processes, including AML/CFT compliance, IT resilience, conflicts of interest, market abuse, outsourcing arrangements, consumer protection, safekeeping, and complaint handling
• Regulatory audits and ongoing reporting obligations

If all this sounds extremely demanding, it is because it is.

In Q1 2025, the European Securities and Markets Authority (ESMA) recognised only 32 CASP licence applicants. Of these, half are on the non-compliant list, meaning they are failing to meet key requirements and are at risk of losing their status.

The difficulty is kind of the point. ESMA has specifically said that crypto asset service providers warrant a higher level of scrutiny.

Some commentators have gone as far as saying the regime change from VASP licence to CASP has killed Europes crypto industry. But we would argue that this is an exaggeration.

Yes, MiCAR makes it tougher - and intentionally so - to offer crypto asset services in the EU.

The flipside is that it replaces a patchwork of homegrown regimes with a single EU-wide standard, enables one authorisation to operate across all 27 EU member states, and may increase consumer and investor confidence.

Of course, this does not change the fact that transitioning is onerous and may offer no tangible benefit to your business relative to the costs involved.

If that is you, not all is lost. Provided you do not intend to actively solicit clients who are resident in the EU, there are cost-effective and viable alternatives to MiCAR, namely SRO membership in Switzerland and MSB registration in Canada.

SROs are self-regulatory organisations. They regulate their members and, in turn, are overseen by FINMA, Switzerlands financial services regulator.

The minimum capital requirements for SRO membership stem from company law, not specialised financial services legislation: CHF 20,000 (around EUR 21,400) for limited companies (GmbH) and CHF 100,000 (around EUR 107,000) for stock corporations (AG / SA).

The application process and ongoing requirements are also less bureaucratic. While you do need to prove you have robust anti-money laundering mechanisms and submit regular reports, the regulatory burden is lower than under MiCAR. All being well, you can expect to be up and running in three to four months.

SRO memberships biggest advantage over MSB registration is that Switzerland is still at the heart of Europe. If your team is primarily based in Europe, this makes it the most practical alternative to a CASP licence.

You are also still able to reach EU consumers through reverse solicitation, though EU regulators may not take kindly if EU residents start making up a significant portion of your customer base.

Crucially, there are no restrictions on crypto custody, though there is a 60-day limit on holding fiat funds. This means it is the better alternative if you hold your own tokens or provide institutional custody services.

The tradeoff is that Switzerlands cost of doing business is high. In 2024, Switzerland was the most expensive country in Europe. These costs add up in salaries, rent, utility bills, and other incidentals.

If proximity to Europe is not a must, registering as an MSB in Canada is more cost-effective than SRO membership.

There are no minimum initial or ongoing capital requirements and the application process is less bureaucratic, subject to robust AML checks.

Best of all, the cost of living is 71.7% lower than it is in Switzerland.

Canadas biggest downside is that it is extremely challenging to obtain a custody service licence unless you are a large, well-resourced firm.

This means MSB registration may not be a good option if you offer direct, full-service crypto custody services, as you will need to partner with exchanges or infrastructure providers, increasing overhead and potentially reducing operational control.

There are no two ways about it. To continue actively marketing your crypto asset services to EU-based consumers, you need to apply for a CASP licence under MiCAR, with the significant upfront investment and ongoing obligations this entails.

The good news? The VASP regime change, while inevitable, does not have to spell the end for your crypto asset services business. Depending on your business model and goals, SRO membership and MSB registration can both be viable, cost-effective options that will enable you to continue operating with minimum disruption.

The key is not to dither and delay. With less than a year to go - and the regulatory limbo in Poland - you must decide now. Advapay can help you every step of the way: from picking the right jurisdiction, to document preparation and ongoing support.

How can Advapay assist you in launching your fintech business?

• Assistance in EMI/PI licencing in the EEA/UK
• Registration of MSB company in Canada
• Delivery of a comprehensive Core banking system encompassing back-office and white-label applications for end-users
• Assistance in payment infrastructure development
• BaaS-solutions in collaboration with our partners - EEA/UK licensed EMIs and PIs