German Legal Advice on MiCAR 

With the Markets in Crypto-Assets Regulation (EU) 2023/1114 (MiCAR), the European legislator has regulated the law on cryptocurrencies and other crypto-assets across Europe for the first time in a comprehensive manner. The substantive provisions of MiCAR came into force in stages in 2024. The parts relating to the issue of asset-referenced tokens and e-money tokens have been in force since the middle of the year. The remaining provisions on the issuance of other tokens and the regulation of crypto-asset services have been in force since the end of December 2024. The new regulation also intends to promote the cross-border provision of crypto-asset services within the European Economic Area (EEA) by enabling a notification procedure to be carried out in a familiar manner (e.g. in accordance with CRD, MiFID, UCITSD or AIFMD) (so-called European passport).

Looking at crypto regulation from an isolated German perspective, MiCAR is a major step forward, at least with regard to the issuance of crypto-assets, as many legal uncertainties have been resolved. As far as the regulation of crypto-asset services (e.g. custody and administration, operation of a trading platform, portfolio management or investment advice) is concerned, these services were already partially regulated under the German Banking Act (KWG) and the German Securities Institutions Act (WpIG). However, what is new - also in Germany - are specific regulations on conduct and organisational obligations, which are also not unfamiliar to other areas of financial supervisory law, e.g. under the Markets in Financial Instruments Regulation (MiFID) or the implementing German Securities Trading Act (WpHG).

The main barrier to market entry in Germany is the requirement for a MiCAR licence (authorisation) if a company wishes to provide crypto-asset services. Unless an authorisation has already been granted by another EEA state and the provision of services can be notified for the German market, an application for authorisation can be submitted to BaFin. The details of the authorisation procedure are governed by delegated acts. German credit and securities institutions that have already provided crypto-asset services regulated under German law prior to the relevant date of application of MiCAR may be able to undergo a simplified national authorisation procedure in accordance with the German Crypto Markets Supervision Act (KMAG).

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