05 Sep MiCA Implementation Act
Following the entry into force of the Markets in Crypto-assets Regulation (MiCA), on 14 July 2023 the Dutch legislator has started a consultation on the proposal for the MiCA implementation act (Uitvoeringswet verordening cryptoactiva, the Implementation Act) and it’s explanatory memorandum (memorie van toelichting). Under this Implementation Act the Dutch legislator intends to reduce the transitional period for registered crypto service providers from 18 to 6 months. As a result, these companies will have to apply for a MiCA licence as a crypto-asset services provider (CASP) earlier than expected.
This blog outlines an overview of the Implementation Act regarding the transitional period for registered crypto service providers and its implications for these companies.
1. Purpose of the Implementation Act
Although MiCA is an EU regulation that has direct effect in the Member States, it is necessary to amend Dutch legislation on certain points. These amendments mainly concern rules to provide the supervisor with the appropriate tools to enforce MiCA. In addition, MiCA contains a number of Member State options that should be worked out at a national level (gold-plating). The Implementation Act provides for this.
2. Transitional measure
One of the Member State options relates to the transitional measure for CASPs as set out in art. 143(3) MiCA. Pursuant to the first sentence of art. 143(3) MiCA CASPs that provided their services in accordance with applicable law before 30 December 2024, may – in principle – continue to do so until 1 July 2026 or until they are granted or refused as a CASP whichever is sooner. In that case, a transitional period of 18 months would apply.
In the Netherlands the applicable law relates to the registration obligation for crypto service providers with the Dutch Central Bank (DNB) pursuant to the Fifth Anti-Money Laundering Directive (AMLD5) and its implementation in the Dutch Money Laundering and Terrorist Financing Prevention Act (Wwft). Therefore, all companies that are registered with DNB as a crypto service provider before 30 December 2024 will fall within the scope of the transitional measure. Companies that provide crypto-asset services within the meaning of MiCA and are not registered would need to apply for authorisation as a CASP as of 30 December 2024.
3. Member State option
However, pursuant to the second sentence of art. 143(3) MiCA Member States may decide not to apply the transitional regime for CASPs or to reduce its duration. It follows from the explanatory memorandum to the Implementation Act that the Dutch legislator intends to reduce the duration of the transitional regime. The intention is to reduce the transitional period to a maximum of 6 months. This would mean that companies that are registered with DNB as a crypto service provider before 30 December 2024, may continue to provide their services until 1 July 2025 at the latest. Companies that provide crypto-asset services within the meaning of MiCA and are not registered would need to apply for authorisation as a CASP as of 1 July 2025 at the latest.
For reasons of workability of the Implementation Act, consultations with regulators are still taking place. The final transitional period will be established in the EU Financial Markets Regulations Implementation Decree (Besluit uitvoering EU-verordeningen financiële markten). Due to long processing times among the Dutch Authority for Financial Markets (AFM), it is questionable whether the proposed transitional period is feasible.
4. Deadline for clarity
Pursuant to the third sentence of art. 143(3) MiCA Member States shall notify the European Commission and the European Securities and Markets Authority (ESMA) by 30 June 2024 whether they have exercised the Member State option and the duration of the transitional regime. Consequently, it will be clear whether the Dutch legislator will implement the proposal to reduce the transitional period to 6 months by 30 June 2024 at the latest.
For more information about this development, see our blog about the MiCA timelime.
Do you have any questions about MiCA and its implications for your business? Please contact Willem-Jan Smits or Marlinde Nannings. Our team is ready to help you.