MiCAR’s Timeline: Critical Deadlines for Compliance

The Markets in Crypto Assets Regulation (MiCAR) represents a significant regulatory overhaul for the European crypto industry, bringing clarity and consumer protection to the world of digital assets. With MiCAR's staggered rollout, businesses need to stay informed about critical compliance deadlines to avoid penalties or disruptions. In this article, we outline the key dates for MiCAR's implementation and what crypto businesses need to do by each milestone to remain compliant.

Why MiCAR’s Timeline Matters

MiCAR’s phased rollout provides businesses with time to adapt to the new regulatory requirements. However, missing key deadlines could result in steep fines, suspension of operations, or even a ban from operating in the European Union. Whether you run a crypto exchange, issue tokens, or provide custodial services, understanding MiCAR’s timeline is essential for strategic planning.

By staying ahead of these deadlines, your business can focus on the adjustments needed for licensing, compliance, and transparency measures, ensuring a smooth transition to the new regulatory environment.

Check below for more detailed info on each deadline.

1. MiCAR’s Initial Approval and Adoption Phase

Key Date: April 2023 – MiCAR Approved by the European Parliament

MiCAR was approved by the European Parliament on April 20, 2023, marking the beginning of its regulatory framework. The act was signed into law on May 31, 2023, and published in the Official Journal of the European Union (OJEU) on June 9, 2023.

Key Date: June 2023 – MiCAR Enters Into Force

The regulation came into force on June 29, 2023, initiating its gradual implementation across EU member states.

2. Stablecoin Regulation Deadline

Key Date: June 30, 2024 – Stablecoin Compliance Begins

Due to their potential impact on financial stability, stablecoins face particularly strict regulations under MiCAR. By June 30, 2024, all businesses issuing asset-referenced tokens (ARTs) and e-money tokens (EMTs) (such as stablecoins) must comply with MiCAR’s rules.

Considerations for Compliance:

• Stablecoin issuers must ensure their tokens are fully backed by liquid assets and submit regular transparency reports to regulators.

• Issuers must also meet MiCAR’s capital and liquidity requirements, maintaining sufficient reserves to cover all issued tokens.

• Regular audits and disclosure of reserves will be mandatory.

• Whitepaper Requirement: Token issuers must prepare a whitepaper according to Article 6 of MiCAR, providing detailed information about the token, its functionality, associated risks, and the technology behind it.

This early compliance deadline means that stablecoin issuers must act quickly to align with MiCAR’s standards, especially in terms of transparency, reserve management, and whitepaper requirements.

3. Licensing and Authorization Phase

Key Date: January 2025 – Licensing Begins for Crypto Asset Service Providers (CASPs)

By January 2025, crypto businesses operating as Crypto Asset Service Providers (CASPs), including exchanges, wallet providers, and token issuers, must start applying for licenses to continue their operations within the EU. This is one of the most crucial deadlines for businesses.

Grandfathering Period for CASPs

MiCAR provides for a grandfathering period of up to 18 months for existing crypto-asset service providers (CASPs), allowing them to continue operations while transitioning to full compliance. However, this grandfathering period is not mandatory for all jurisdictions, meaning that some EU member states may offer a shorter period. Businesses should check the specific requirements in their country and begin working toward full MiCAR compliance well ahead of the January 2025 licensing deadline.

Considerations for Compliance:

• Determine the appropriate license category for your business, such as operating an exchange, providing custody services, or issuing tokens under MiCAR.

• Begin assembling the required documentation, which may include capital adequacy proof, governance structures, risk management procedures, and security protocols.

• Ensure that your business processes align with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations, as these are integral to MiCAR’s licensing requirements.

Since it may take time to complete the licensing process, it’s recommended to start preparing your application well in advance.

For a detailed breakdown of the different MiCAR licenses, check out our MiCAR licensing article.

4. TFR Compliance Deadline

Key Date: December 30, 2024 – TFR Compliance Begins

The Transfer of Funds Regulation (TFR), also known as the "Travel Rule," will be enforced from December 30, 2024, alongside MiCAR. This regulation mandates that CASPs exchange personal data of both the sender and recipient of crypto asset transfers, ensuring transparency and preventing money laundering.

Considerations for Compliance:

• Review and adapt your systems for collecting and verifying sender and recipient data.

• Ensure your platform is compatible with protocols for exchanging transaction data between CASPs before executing any transactions.

• Given the additional burden of exchanging personal data for compliance, businesses should start adapting their systems now to meet TFR requirements by the deadline.

5. General Compliance Phase

Key Date: July 2026 – Full Compliance for CASPs

By July 2026, all crypto-asset service providers (CASPs) must be fully compliant with MiCAR. This is the deadline by which all businesses, including those not related to stablecoins, must adhere to the following:

• Obtained the necessary MiCAR license from their National Competent Authority (NCA).

• Fully comply with MiCAR’s requirements regarding AML/KYC, consumer protection, and operational transparency.

• Crypto custodians must demonstrate that they meet enhanced standards for asset protection, including segregating customer funds from company-owned assets.

Considerations for Compliance:

• Carry out a thorough internal review to confirm your company meets MiCAR’s compliance standards across all operational functions.

• Review your security measures, data protection protocols, and transparency practices to ensure they align with MiCAR’s high standards.

Starting the preparation early will ensure that you’re ready for the full rollout of MiCAR without last-minute panic or operational disruptions.

6. Ongoing Reporting and Audits

Key Date: Ongoing – Regular Audits and Reporting

After July 2026, businesses will enter a phase of ongoing compliance under MiCAR. This involves regular reporting and audits to ensure that businesses continue to meet MiCAR’s high standards over time. For example:

• Crypto exchanges and token issuers must submit regular reports on transactions, trading volumes, and any security incidents.

• Stablecoin issuers need to maintain up-to-date transparency reports on their reserves, ensuring that the issued stablecoins are fully backed by liquid assets.

• Custodians will need to undergo frequent audits to confirm that customer assets are properly segregated and secure.

Considerations for Compliance:

• Consider establishing a dedicated compliance team or consulting with external specialists to oversee your company’s ongoing adherence to MiCAR’s regulatory framework.

• Set up an internal system for tracking and documenting compliance activities, making future audits easier and more transparent.

• Consistent compliance reviews will help safeguard your business’s operations within the MiCAR framework.

Stay Ahead of MiCAR’s Key Deadlines

MiCAR introduces a series of crucial deadlines that will affect every business involved in the European crypto industry. From early deadlines for stablecoin issuers to the licensing requirements for Crypto Asset Service Providers (CASPs), preparing for each milestone is essential to staying compliant.

Starting early, securing the right licenses, and ensuring that your company’s operational and security measures align with MiCAR’s requirements will help you avoid disruptions and fines. By fully understanding and adhering to MiCAR’s timeline, your business can thrive in this newly regulated market.

If your business lacks the time, resources, or capacity to meet MiCAR's regulatory requirements, partnering with Tangany can provide a seamless solution. Our compliant and fully-regulated digital asset custody services ensure that you meet MiCAR standards efficiently, allowing you to focus on growing your business.

Contact us today to learn more about how we can support your MiCAR compliance needs.

Disclaimer

This content is for informational purposes only and does not constitute legal advice. Tangany is not a law firm and is not liable for any decisions or actions taken based on this article. Always consult with a qualified legal professional for specific advice regarding regulatory compliance.