The European Union has finally issued a full-scale regulatory framework for crypto-assets. Regulation (EU) 2023/1114 on Markets in Crypto-Assets (“MiCA”) represents the EU’s most ambitious step yet in aligning financial regulation with technological innovation.
Formally adopted in June 2023 and entering into application between June and December 2024, MiCA establishes a harmonized regime for the issuance of crypto-assets and the operation of crypto-asset service providers (“CASPs”) across all EU Member States.
At Lextrust Law Firm, we assist a diverse range of clients – from crypto-native entrepreneurs to institutional sponsors – in understanding and implementing MiCA’s legal, operational, and strategic requirements.
Regulating Crypto-Asset Service Providers: A European Licence
MiCA introduces a mandatory licensing regime for entities providing services on crypto-assets, including custody, trading platforms, portfolio advice, order execution, and token placement.
All CASPs must be legally established within the EU and meet minimum capital, governance, AML/CFT, and IT security standards. Once authorized, they benefit from an EU-wide passport allowing cross-border activity – a model inspired by MiFID II.
Luxembourg-based entities – especially those operating under support PSF or VASP regimes – must evaluate their positioning and consider whether MiCA registration or full authorization is required under the new framework.
Stablecoins and the Issuer Regime
MiCA creates specific obligations for the issuers of two types of tokens: asset-referenced tokens (“ARTs”) and e-money tokens (“EMTs”).
ARTs are backed by baskets of assets (including fiat currencies or commodities), whereas EMTs are pegged to a single fiat currency. Both are subject to strict rules covering white paper disclosures, capital requirements, redemption mechanisms, and oversight by national regulators.
Importantly, EMTs may only be issued by credit institutions or electronic money institutions authorized in the EU. This rule effectively disqualifies many crypto-native issuers from operating stablecoins in Europe unless they obtain appropriate licensing.
Luxembourg, as a jurisdiction combining financial regulatory sophistication with openness to innovation, may offer a strategic platform for such issuers – provided that legal and operational substance are aligned.
What MiCA Does Not Cover
Despite its broad scope, MiCA does not apply to:
- Security tokens (already regulated under MiFID II and the Prospectus Regulation);
- Non-fungible tokens (“NFTs”) with unique characteristics, unless they are fractionalized or mass-issued;
- Fully decentralized finance protocols (“DeFi”) without a centralized governance structure.
These exclusions leave room for future regulatory intervention – or for legal creativity in structuring hybrid or multi-layered token models.
Practical Implications for Fund Sponsors and Family Offices
MiCA’s impact goes beyond the crypto ecosystem. Fund managers, SCSp sponsors, and family offices must assess whether their exposure to digital assets, their reliance on unregulated intermediaries, or their use of tokenized instruments could fall within the regulation’s scope.
The use of CASPs for custody, execution or token issuance, as well as the internal provision of advice or safekeeping functions, may now trigger MiCA licensing obligations or require outsourcing to authorized entities.
Legal qualification, contractual structuring, and jurisdictional strategy will become central pillars of compliance for any fund or vehicle engaging in digital markets.
Luxembourg as a Strategic Jurisdiction
Luxembourg offers a combination of regulatory clarity, supervisory engagement, and structuring flexibility. The Commission de Surveillance du Secteur Financier (the “CSSF”) has already taken steps to identify and supervise VASP-type entities. With MiCA, this supervisory role will intensify.
Entities considering Luxembourg as their hub for EU crypto activity should begin preparing immediately: assessing licensing needs, documenting operational processes, and reviewing corporate governance frameworks.
With authorization processes already underway, 2025 will be the year of regulatory truth for crypto players in Europe.
Conclusion: A Regulatory Wake-Up Call
MiCA is not merely a new regulation – it is a statement of intent. The EU is no longer a passive observer in the evolution of digital assets; it has chosen to shape the rules.
For sponsors, managers, and digital entrepreneurs, this is a regulatory wake-up call. Complacency is no longer an option. The coming year will separate the merely curious from the truly compliant.
At Lextrust Law Firm, our digital asset and fund structuring teams are ready to assist clients in anticipating and embracing this transformation.
For further information, please contact us to arrange a consultation with:
Jonathan Charles BURGER
Founding Partner
