Adapting to MiCA: A Guide for Estonian Crypto Businesses

Estonia is a longtime pioneer in the digital space, with a reputation for encouraging innovation and creating a clear framework for emerging technologies. As the European Union (EU) implements the Markets in Crypto-assets Regulation (MiCA), Estonia is actively aligning its regulatory landscape with this groundbreaking EU-wide cryptoasset framework.

In this article, we elaborate on the implementation of MiCA in Estonia and what steps companies should take to become compliant.

Estonian CASP Regulation

The main act that deals with the implementation of MiCA provisions is the Krüptovaraturu seadus (Cryptocurrency Market Law / Law). The Law is applicable to persons who issue, offer and admit crypto-assets to trading on a crypto-asset trading platform and provide crypto-asset services for the purposes of, and within the scope of, the application of MiCA.

The role of the regulator in the crypto-asset sphere is assigned to the Finantsinspektsioon (Financial Supervisory Authority / FSA).?

At the moment, the FSA has not yet published any guidelines for crypto-asset service providers (CASPs), which can be used when preparing the materials required for applying for authorisation and in subsequent activities.?

However, the regulator's website already has a block (register) for those who will be subject to its supervision under MiCA licensing. You can check it out here.

Key Provisions for CASPs

Here you can find the most important provisions, which persons is required to comply in order to get a CASP license:

1. First of all, to operate on markets in crypto-assets, a participant must hold an authorisation (license). Such authorisation is granted to an entity and revoked by the FSA. Also note that it is granted for an unspecified term and it can’t be transferred to another person.
2. It's equally important to know that a company who has obtained an authorisation must have the registered office in Estonia and it should be determined in its Memorandum of Association or Articles of Association.
3. Please pay attention that Estonian Law defines that the person who wants to get a CASP license is required to be a Private limited company or Public limited company.
4. If we are talking about the Private limited company in the Law stated it must have a supervisory board consisting of at least 3 members. But it is not compulsory for those CASPs who do not provide such services as providing custody and administration of crypto-assets on behalf of clients OR operation of a trading platform for crypto-assets.
5. The management board of a CASP shall be presented by at least 2 members. The CASP is obliged to notify the FSA of a change to its management body at least 30 days before the commencement of activities of a new member of the management body, unless notification is not possible with good reason before that deadline.
6. The company with a CASP license must establish rules for its employees for the reporting of violations of the requirements provided in MICA and establish a reporting channel allowing for internal reporting of violations of law.
7. A CASP shall follow the requirements for the operational resilience of digital technologies as set out in Regulation (EU) 2022/2554 of the European Parliament and of the Council as of January 17, 2025.

Procedure of Applying for a CASP License

An applicant intending to operate as a CASP must adhere to the conditions for the provision of crypto-asset services set out in Article 62 of the MiCA and Article 6(1) of the Law and must provide the FSA with appropriate and full information.

The application must be filed in Estonian. If the applicant plans to provide application documents in English, this must be clearly stated in the application.

It should be borne in mind, however, that the FSA may require additional information and documents if, on the basis of the provided information and documents, it is not satisfied that the applicant for authorization has adequate capacity to provide cryptoasset services or complies with legal requirements, or if it is necessary to verify other circumstances concerning the applicant.

The FSA will assess whether an application for a license is complete within 25 working days. It will notify the applicant whether its application is complete or incomplete. If the FSA concludes that it is complete, then the FSA assesses within 40 working days whether the applying CASP complies with the MiCA and the Law. The mentioned deadline also may be suspended for 20 business days. The applicant will be informed of this within 5 working days after the decision is made.

As opposed to some other national competent authorities in the EU, the Estonian FSA has not yet developed and published separate forms in Estonian or English, but there is a reference to the ESMA RTS Annex V and VI forms.

It remains to be hoped that in the near future license application forms in Estonian or English will also be published on the website.

The processing fee payable when applying for licensing of a CASP is EUR 3,000.

Cross-border Provision of Crypto-asset Services

If a CASP intends to offer crypto-asset services in more than one Member State, it is mandatory to submit the following detailed information to the FSA:

• a comprehensive list of the Member States where the CASP plans to deliver crypto-asset services;
• a detailed description of the crypto-asset services that the provider aims to offer on a cross-border basis, specifying the nature and scope of these services;
• a proposed starting date for the intended provision of the crypto-asset services in the respective Member States;
• a clear list of all additional activities carried out by the CASP that are not explicitly covered under the MiCA.

Once the notification has been submitted, the CASP is authorized to commence offering services in the specified Member States from either the date the competent authority of that State acknowledges receipt of the notification from Finantsinspektsioon, or no later than 15 calendar days after the information has been duly submitted to Finantsinspektsioon. Importantly, no processing fee is required for the notification process related to the cross-border provision of services.

Transition Period in Estonia

In general, the mentioned Law will apply to a person who wishes to provide a crypto service from December, 30 2024.

But a virtual currency service provider and any other person who, before the entry into force of Cryptocurrency Market Law, is entitled to provide virtual currency services under the? Money Laundering and Terrorist Financing Prevention Act shall bring their activities into compliance with the requirements set out in this Law by July 1, 2026 at the latest.

If the above provider has submitted an application for authorization to the FSA by July 1, 2026 and the regulator has not made a decision to grant or deny authorization by that date, the activities of the virtual currency service provider shall not be considered unauthorized activities for the purposes of Section 372 of the Penal Code. In this event, the provider shall not be allowed to enter into new customer contracts from the specified date until the decision to grant or deny authorization has been made.

A virtual currency service provider established and operating before December 30, 2024, which does not provide crypto-asset services as of July 1, 2026, shall not be required to apply to the FSA for authorization. The provisions of the? Law will not apply to a contract related to virtual currency services that such a provider entered into before December 30, 2024. The virtual currency service provider will be required to notify the customer of the termination of the service and return the customer's assets to the wallet address or payment account specified by the customer within a reasonable period of time.

How MiCA will influence your business

Implementing MiCA presents opportunities but also challenges for businesses in Estonia.

• Opportunities:

- Common rules across the EU simplify cross-border transactions.

- Increased consumer confidence due to standardized protections can boost market growth.

• Challenges:

- Businesses must review and possibly restructure compliance mechanisms.

- The initial costs of transitioning to MiCA compliance can be significant.

How Manimama сan Help

At Manimama, we specialize in assisting businesses with the complexities of crypto-asset regulations. From navigating licensing to advising on compliance strategies, we are here to ensure a smooth transition to MiCA compliance.

Our services include:

• Comprehensive regulatory assessments.
• Assistance in obtaining a CASP license in Estonia under MiCA.
• Preparation of policies and procedures – it can be drafting new policies and procedures to meet MiCA requirements or revising the existing policies to incorporate MiCA requirements.
• Tailored advice on aligning operations with Estonian and EU requirements.
• Many other.

If you are interested in obtaining a license from scratch under the new MiCA standard or want to update your company to its requirements, then contact us for a detailed proposal on how we can help you. With us, your path to becoming licensed will be as smooth and straightforward as possible!

Our Сontacts

Now is the time to prepare your business to meet these new challenges and seize opportunities in a harmonized EU market.

Don’t navigate this alone — partner with Manimama Law Firm. We are the trusted advisors you need to stay ahead of the curve.

Feel free to contact us for more details at telegram @ManimamaBot or @manimama_sales where we will respond to your inquiry immediately.

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