As the European Union’s flagship crypto-asset framework moves into full enforcement, we set out below what businesses operating in or targeting the EU market need to know and where our team can add value.
The European Union’s Markets in Crypto-Assets Regulation (MiCA) has fundamentally changed the regulatory landscape for crypto businesses operating within the EU. By introducing a harmonised legal framework, MiCA replaces the previous patchwork of national rules with a single licensing regime, providing greater legal certainty for businesses while enhancing consumer protection and market integrity.
Although MiCA entered into force in June 2023, its provisions have been implemented in stages. The rules governing issuers of asset-referenced tokens and electronic money tokens became applicable on 30 June 2024, while the wider framework, including the authorisation regime for Crypto-Asset Service Providers (CASPs), has applied since 30 December 2024. The transitional “grandfathering” period for firms operating under existing national regimes ended on 1 July 2026, making MiCA authorisation essential for firms wishing to continue providing regulated crypto-asset services across the EU.
- What Does MiCA Regulate?
MiCA regulates both crypto-assets and the businesses that provide services relating to them.
- Crypto-Assets
MiCA distinguishes between three principal categories of crypto-assets:
- Electronic Money Tokens (EMTs) – crypto-assets designed to maintain a stable value by referencing a single official currency.
- Asset-Referenced Tokens (ARTs) – crypto-assets whose value is linked to one or more assets, rights or official currencies.
- Other Crypto-Assets – crypto-assets that do not fall within the above categories and are not already regulated under existing EU financial services legislation.
Issuers of ARTs and EMTs are subject to enhanced regulatory obligations, including authorisation requirements, governance standards, capital requirements and the preparation of a compliant crypto-asset white paper before offering tokens to the public or admitting them to trading.
- Crypto-Asset Service Providers (CASPs)
MiCA also establishes a comprehensive licensing regime for businesses providing crypto-asset services, including:
- custody and administration of crypto-assets;
- operation of crypto trading platforms;
- exchange of crypto-assets for fiat currency or other crypto-assets;
- execution and transmission of client orders;
- crypto-asset portfolio management;
- investment advice relating to crypto-assets; and
- transfer services involving crypto-assets.
Authorisation is granted by the competent authority of a single EU Member State and may then be passported throughout the European Union and the European Economic Area. In Cyprus, the competent authority is the Cyprus Securities and Exchange Commission (CySEC).
- Why MiCA Matters?
MiCA provides businesses with access to a single European market under one regulatory licence while establishing common standards for governance, transparency, operational resilience and consumer protection. Firms offering regulated crypto-asset services without the required MiCA authorisation risk significant regulatory consequences and may no longer lawfully provide services within the EU.
- Taxation of Crypto-Asset Income in Cyprus
In addition to the regulatory developments under MiCA, Cyprus has introduced a significant tax measure affecting crypto-assets. With effect from 1 January 2026, gains derived from cryptocurrency transactions are subject to income tax at a flat rate of 8%. This special tax treatment does not apply to gains arising from crypto-assets acquired through cryptocurrency mining, which remain subject to the ordinary tax rules.
How We Can Assist
Our team advises businesses and individuals on the establishment and operation of Crypto-Asset Service Providers (CASPs), as well as on a broad range of legal and regulatory matters relating to the implementation and application of the MiCA Regulation.
Our services include:
- Advising on the establishment and operation of CASPs in Cyprus.
- Assisting with the incorporation, licensing, and regulatory compliance of CASPs.
- Preparing and submitting authorisation applications to the Cyprus Securities and Exchange Commission (CySEC).
- Acting as the primary liaison with CySEC throughout the authorisation process and providing ongoing regulatory support following the granting of authorisation.
For further information on the establishment and operation of Crypto-Asset Service Providers (CASPs) or to discuss the regulatory requirements under the MiCA Regulation, please contact our team.
