MiCA License in Europe: Requirements for UAE Crypto Companies Expanding Into the EU

Cryptocurrency firms in UAE looking to grow their operations in the European Union will have to adhere to the Markets in Crypto-Assets Regulation (MiCA). Most companies involved in offering regulated crypto-asset services within the EU need authorisation as Crypto-Asset Service Providers (CASPs) from the competent authority in an EU Member State.

A crypto license obtained from VARA, ADGM FSRA, or DFSA in UAE does not guarantee authorization to run the company in Europe. The firm will need an EU presence, to meet the MiCA license criteria, and fulfil the required regulatory compliance with respect to the governance, capital, consumer protection, and anti-money laundering requirements.

This guide describes the licensing procedure of the MiCA regulation, and the issues UAE crypto firms need to consider when expanding to the European market.

What is the EU Markets in Crypto-Assets Regulation?

The EU Markets in Crypto-Assets Regulation, formally Regulation (EU) 2023/1114, provides a harmonized regulatory regime for crypto-assets and related services within the European Union.

MiCA sets out the requirements regarding the issuance of crypto-assets, authorisation of service providers, market integrity, consumer protection, and regulatory oversight.

The provisions of MiCA relating to asset-referenced tokens and e-money tokens entered into force on 30 June 2024, whereas the general provisions of CASP licensing regime entered into force on 30 December 2024.

MiCA seeks to address inconsistencies in national crypto regulation by ensuring uniformity of rules throughout EU Member States.

It is crucial that MiCA does not regulate all financial instruments based on blockchain technology. The crypto-assets classified as financial instruments under EU securities law normally fall outside the scope of MiCA and apply to financial services rules.

Read More: What Does a Cryptocurrency Attorney in Dubai Do? A Complete Guide

Do UAE Crypto Companies Need MiCA License?

A UAE company needs MiCA authorization for providing crypto-assets services in the EU.

It concerns companies operating under UAE regimes, such as VARA in Dubai, FSRA in ADGM, DFSA in DIFC.

Despite UAE regulation approval being an indication of already having a compliance framework, this does not satisfy the licensing requirements of Europe.

According to Article 59 of MiCA, any CASP that is approved has to maintain a registered office in a Member State of the EU where they provide some services; they also have their place of effective management in the EU and at least one director who is based in the EU.

As such, it is usually common for a business from the UAE to create a subsidiary or some other entity that can acquire CASP approval.

There is a reverse solicitation exemption according to MiCA where an EU client solicits the firm on their own exclusive initiative. Nonetheless, this exemption cannot be used to market to or solicit EU clients.

What Crypto Activities Will Need MiCA Authorization?

MiCA will regulate various crypto-asset service categories.

These are:

-          Safekeeping and administration of crypto-assets on behalf of their customers.

-          Running of crypto-asset trading platforms.

-          Exchange of crypto-assets against fiat money or other crypto-assets.

-          Execution of orders on behalf of their customers.

-          Reception and transmission of crypto-asset orders.

-          Placement of crypto-assets.

-          Provision of advice or portfolio management services involving crypto-assets.

-          Transfer services of crypto-assets on behalf of their customers.

Firms will have to specify what type of services they plan to offer when filing for authorization.

For instance, an UAE-based brokerage firm entering into the European market would need to obtain authorization for either exchange of crypto-assets, execution of orders or reception and transmission of orders, depending on how it operates.

A firm running an order book-based platform would, on the other hand, need to be authorized to run a crypto-asset trading platform.

The appropriate categorization will depend on the activities carried out, not the business terminology.

Read More: Choosing the Right Cryptocurrency Attorney in Dubai: Key Factors to Consider

MiCA Licensing Requirements for UAE Firms

For acquiring a MiCA license, applicants are required to prove that they have adequate financial resources, governance structures, operational systems, and compliance with regulations.

1. EU Presence and Corporate Governance

Applicants are required to have an eligible establishment in one of the Member States of the EU.

The applicant needs to provide proof of proper management, ownership, and corporate governance structure.

It is the job of the regulators to check the qualifications, experience, and integrity of the management and those stakeholders who hold qualifying stakes.

2. Minimum Capital and Prudential Safeguards

Article 64 of MiCA outlines separate minimum capital amounts based on the services rendered.

Class 1: Some services like advice, and order transmission- €50,000

Class 2: Custody, Exchange, and Order Execution- €125,000

Class 3: Trading Platform Operations- €150,000

According to Article 67, prudential safeguards are required to be maintained by CASPs which should not be less than the greater amount between the minimum capital or a quarter of the preceding year's fixed overhead costs.

Such prudential safeguards could be eligible own funds, qualifying insurance or a mixture of both as per MiCA provisions.

In case of new entities, forecasted fixed overhead is taken into consideration while calculating the relevant amount.

3. AML/CFT and Compliance Program

Anti-money laundering/counter terrorist financing measures should be put in place by CASPs according to the EU and national laws in force.

They typically comprise customer due diligence, beneficial ownership identification, sanctions list screening, transaction monitoring, and suspicious activity reporting.

Businesses should also consider the EU Transfer of Funds Regulation and the Travel Rule related to crypto-assets where applicable.

The existing UAE compliance policies can serve as a good baseline, but they still should be reviewed and adjusted to EU standards.

4. Technology and Management of Client Assets

As required by MiCA, CASPs should have proper information technology systems in place, security, business continuity, and internal control measures.

They should also comply with the applicable rules regarding the segregation and protection of client assets.

Depending on their operations, businesses will need custody policies, order execution, complaints handling, and detection of market abuse systems.

The new EU Digital Operational Resilience Act (DORA) imposes certain ICT risk management and operational resilience requirements for CASPs.

5. Stablecoins and Token Classifications

Companies in UAE engaged in issuance or trading of stablecoins should evaluate token classifications as per MiCA guidelines.

According to MiCA, ARTs (Asset-Referenced Tokens) and EMTs (E-Money Tokens) differ from other crypto-assets.

ARTs and EMTs have special regulations with regard to their issuance, authorization, reserve, and redemption.

It is critical to note that CASP authorization will not necessarily make the company eligible to issue stablecoins. There could be special issuer requirements for that.

Read More: How to Buy and Sell Cryptocurrency in UAE

MiCA License Application for UAE Companies

The process of application for the MiCA license for UAE companies usually entails the following steps.

Step 1: Choosing the Right EU Member State

The company should choose the most suitable EU member state based on the planned activities.

Application is made to the competent authority of the chosen member state at the national level.

Step 2: Set up an EU Legal Entity

An appropriate EU legal entity must be set up by the applicant, having the right registered office, management structure, and activities.

It is important to provide details of the relationship between the applicant from the EU and the parent/affiliated companies based in the UAE.

Step 3: Prepare Regulatory Documents

According to Article 62, applicants must provide documents related to their business model, financial resources, ownership, governance, compliance, and IT arrangements.

Activity-specific documents could cover the policy on custody, trading platform, order execution, and client asset segregation.

Step 4: Application is Submitted

Application is evaluated by the competent authority for completeness and regulatory compliance.

According to Article 63, the competent authority usually has 25 working days to assess completeness and 40 working days from receipt of a complete application to make a decision, taking into consideration permitted suspensions and information requests.

It is important to differentiate these legal assessment periods from the overall period of incorporation, preparation and regulatory interaction.

Step 5: Receive Authorization and Start Business

After obtaining an authorization, CASP will be able to offer crypto-asset services under the authorization.

It is essential to maintain the prudential, governance, operational and compliance requirements.

Read More: Charting the Course for a Cryptocurrency License – Global Trends and Legal Fundamentals

Will the MiCA Licence Be Valid Throughout the European Union?

The main benefit of MiCA licensing regime lies in the passporting system established by MiCA.

According to Article 65, once a CASP has been authorised to offer crypto-asset services, it may provide its services throughout other Member States of the EU without obtaining another CASP licence in every jurisdiction.

The crypto-asset services provider should inform its competent authority about the countries in which it will offer such services and about these services.

Nevertheless, passporting does not exclude the application of other laws.

Read More: The Importance of Cryptocurrency Licenses in Enhancing Industry Legitimac

MiCA Compliance Obstacles for UAE-based Crypto Firms

Going beyond the UAE to operate in Europe involves more than aligning the company’s policies with existing regulations.

Regulatory classification:

The company needs to identify the types of crypto-asset services offered that are classified under MiCA. Similar business activities can fall under different laws.

Substance of the EU operations:

Applicants need to prove that they have substantive management and operation within the EU and not just use the UAE infrastructure.

Outsourcing:

Outsourcing of technology, compliance, or operational services to an affiliate within the UAE should be evaluated in light of relevant EU laws on outsourcing, governance, and data protection.

Continuous compliance:

Prudent safeguards, regulatory reporting, customer protection, and internal controls are necessary.

It is recommended that the company takes into account the differences between MiCA and other EU laws.

Read More: Cryptocurrency License: A Blueprint for Legitimacy and Compliance

MiCA Transition Period: What Changes in 2026?

Under the MiCA transition arrangements, some crypto businesses were permitted to continue operating without CASP authorization while continuing to act under national laws that preceded MiCA.

Nevertheless, the maximum EU-wide transition period ended on 1 July 2026.

Read More: Unlocking the Future: Exploring the Potential of Cryptocurrency Business

FAQs

1. Can a company with a VARA licence offer crypto-asset services in Europe?

No, holding a VARA licence will not automatically entitle the offering of crypto-asset services within the European Union under MiCA. The firm needs to determine if a MiCA licence or any other form of regulatory approval is needed.

2. What is the minimum capital requirement for a MiCA license?

MiCA requires permanently minimum capital levels of €50,000, €125,000, or €150,000 according to the authorised services. Higher capital adequacy may be needed depending on fixed costs.

3. Does MiCA apply to UAE companies offering services to European customers?

Yes, MiCA may apply when a UAE company offers crypto-asset services to individuals in the EU. There is a limited reverse solicitation exemption, but it cannot substitute authorisation when actively soliciting EU residents.

4. Can a single MiCA license be used to service all EU Member States?

A CASP with a MiCA license can offer the authorised services within EU Member States using the passporting provision under MiCA.