The operating license in markets of crypto assets

Authorisation to operate in markets in crypto-assets

The Crypto Markets Act (hereinafter CMA) brought the activities of participants in markets in crypto-assets under the supervision of Finansinspektsioon. The Market in Crypto-Assets Act applies to persons who are engaged in the issuance, offer and admission to trading of crypto-assets on the respective platform, and who provide crypto-asset services within the meaning of Regulation (EU) 2023/1114 of the European Parliament and of the Council (hereinafter MiCA).

For the purposes of CMA and MiCA, crypto-assets are divided into

asset-referenced tokens (also known as ART);
e-money tokens (also known as EMT); and
other crypto-assets (the service providers thereof are also known as CASP).

Asset-referenced token is a type of crypto-asset that is not an e-money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies.

E-money token is a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency.

Other crypto-assets are a type of crypto-asset that is not an asset-referenced token or an e-money token and that does not reference another value or right or a combination thereof and does not maintain a stable value by referencing the value of one official currency.

Application for authorisation to operate in markets in crypto-assets

When applying for authorisation to operate, a distinction must be made between the asset-referenced token and e-money token issuance service and the provision of other crypto-asset services.

Asset-referenced token issuance service

A person may not make an offer to the public, or seek the admission to trading, of an asset-referenced token unless that person is the issuer of that asset-referenced token and is:

a legal person or other undertaking that is established in the European Union and has been authorised by a responsible supervisory authority in accordance with Article 21 of MiCA; or
a credit institution that complies with Article 17 of MiCA.

Upon the written consent of the issuer of an asset-referenced token, other persons may also offer to the public, or seek the admission to trading, of that asset-referenced token. Those persons must comply with Articles 27, 29, and 40 of MiCA.

A credit institution that intends to provide an asset-referenced token issuance service submits an application for authorisation to operate in markets in crypto-assets in accordance with Article 17 of MiCA and § 6(2) of the CMA. If a credit institution intends to issue, and seek the admission to trading, of e-money tokens, it must comply with the conditions laid down in Article 48 of MiCA and notify the white paper to Finantsinspektsioon.

A legal entity (hereinafter applicant) who intends to issue asset-referenced tokens must submit a written application to Finantsinspektsioon in order to apply for authorisation. The application must be submitted on the basis of the EBA’s RTS for application for authorisation. The application must be submitted in Estonian. If the applicant intends to submit documents pertaining to the application in English, it must be clearly stated in the application.

Information and documents required in Article 18(1) of MiCA must be attached to the application, the content of which is specified in the EBA’s RTS:

the address of the applicant issuer;
the registry code of the legal entity being the applicant issuer;
the articles of association of the applicant issuer;
a programme of operations, setting out the business model that the applicant issuer intends to follow;
a legal opinion that the asset-referenced token does not qualify as either of the following:
1. a crypto-asset excluded from the scope of this Regulation pursuant to Article 2(4) of MiCA; or
2. an e-money token;
a detailed description of the applicant issuer’s governance arrangements as referred to in Article 34(1) of MiCA;
where cooperation arrangements with specific crypto-asset service providers exist, a description of their internal control mechanisms and procedures to ensure compliance with the obligations in relation to the prevention of money laundering and terrorist financing under Directive (EU) 2015/849;
the identity of the members of the management body of the applicant issuer;
proof that the members of the management body of the applicant issuer are of sufficiently good repute and possess the appropriate knowledge, skills and experience to manage the applicant issuer;
proof that any shareholder or member, whether direct or indirect, that has a qualifying holding in the applicant issuer is of sufficiently good repute;
a crypto-asset white paper as referred to in Article 19 of MiCA;
the policies and procedures referred to in the first subparagraph of Article 34(5) of MiCA;
a description of the contractual arrangements with the third-party entities as referred to in the second subparagraph of Article 34(5) of MiCA;
a description of the applicant issuer’s business continuity policy referred to in Article 34(9) of MiCA;
a description of the internal control mechanisms and risk management procedures referred to in Article 34(10) of MiCA;
a description of the systems and procedures in place to safeguard the availability, authenticity, integrity and confidentiality of data as referred to in Article 34(11) of MiCA;
a description of the applicant issuer’s complaints-handling procedures as referred to in Article 31 of MiCA;
where applicable, a list of host Member States where the applicant issuer intends to offer the asset-referenced token to the public or intends to seek admission to trading of the asset-referenced token.

The details of managers must be provided to Finantsinspektsioon via the fit and proper assessment form.

In addition to the above, Finantsinspektsioon’s guidelines , which can be found on the website of Finantsinspektsioon, must be taken into account when preparing the materials required for applying for authorisation and in subsequent activities.

Finantsinspektsioon may demand additional information and documents if it is not convinced on the basis of the submitted information and documents as to whether the applicant for authorisation has adequate facilities for the provision of crypto-asset services or whether it meets the requirements of legal requirements, or if other circumstances relating to the applicant need to be verified.

Finantsinspektsioon will assess whether the application for authorisation for an asset-referenced token is complete within 25 working days from receiving the application for authorisation. Finantsinspektsioon informs the applicant whether the application is complete or incomplete. If Finantsinspektsioon has come to the conclusion that the application for authorisation is complete, Finantsinspektsioon will assess within 60 working days whether the applicant issuer meets the requirements established for the issuer of an asset-referenced token. If any additional questions arise, the time limit for the above procedure may be paused for up to 20 working days.

E-money token issuance service

A person may make an offer to the public, or seek the admission to trading, of an e-money token if that person is the issuer of such e-money token and:

a credit institution or e-money institution; and
has notified the white paper to Finantsinspektsioon and has published the white paper in accordance with Article 51 of MiCA.

Upon the written consent of the issuer, other persons may offer to the public, and seek the admission to trading, of the e-money token. Those persons must comply with Articles 50 and 53 of MiCA.

An e-money institution that intends to operate as a crypto-asset service provider must comply with the conditions for the provision of crypto-asset services as laid down in Article 60 of MiCA and in § 6(3) of CMA and must provide Finantsinspektsioon with proper and complete information.

By its decision, Finantsinspektsioon confirms the right of a credit institution and e-money institution to offer, and seek the admission to trading, of an e-money token issued by them if the credit institution or e-money institution complies with the conditions provided in Article 48 of Regulation (EU) 2023/1114 of the European Parliament and of the Council and has notified the white paper to Finantsinspektsioon.

Other crypto-asset services

An applicant that intends to operate as a crypto-asset service provider must comply with the conditions for the provision of crypto-asset services as laid down in Article 62 of MiCA and in § 6(1) of the CMA and must provide Finantsinspektsioon with proper and complete information.

In order to provide other crypto-asset services, the applicant submits an application for authorisation on the form of Annex VI to the ESMA’s RTS.

An application for authorisation must be accompanied by the information and documents required in Article 62(2) of MiCA, the content of which is specified in Annex V to the ESMA’s RTS:

the name, including the legal name and any other commercial name used, the legal entity identifier of the applicant crypto-asset service provider, the website operated by that provider, a contact email address, a contact telephone number and its physical address;
the articles of association of the applicant crypto-asset service provider;
a programme of operations, setting out the types of crypto-asset services that the applicant crypto-asset service provider intends to provide, including where and how those services are to be marketed;
proof that the applicant crypto-asset service provider meets the requirements for prudential safeguards set out in Article 67 of MiCA;
a description of the applicant crypto-asset service provider’s governance arrangements;
proof that members of the management body of the applicant crypto-asset service provider are of sufficiently good repute and possess the appropriate knowledge, skills and experience to manage that provider;
the identity of any shareholders and members, whether direct or indirect, that have qualifying holdings in the applicant crypto-asset service provider and the amounts of those holdings, as well as proof that those persons are of sufficiently good repute;
a description of the applicant crypto-asset service provider’s internal control mechanisms, policies and procedures to identify, assess and manage risks, including money laundering and terrorist financing risks, and business continuity plan;
the technical documentation of the ICT systems and security arrangements, and a description thereof in non-technical language;
a description of the procedure for the segregation of clients’ crypto-assets and funds;
a description of the applicant crypto-asset service provider’s complaints-handling procedures;
where the applicant crypto-asset service provider intends to provide custody and administration of crypto-assets on behalf of clients, a description of the custody and administration policy;
where the applicant crypto-asset service provider intends to operate a trading platform for crypto-assets, a description of the operating rules of the trading platform and of the procedure and system to detect market abuse;
where the applicant crypto-asset service provider intends to exchange crypto-assets for funds or other crypto-assets, a description of the commercial policy, which is non-discriminatory, governing the relationship with clients as well as a description of the methodology for determining the price of the crypto-assets that the applicant crypto-asset service provider proposes to exchange for funds or other crypto-assets;
where the applicant crypto-asset service provider intends to execute orders for crypto-assets on behalf of clients, a description of the execution policy;
where the applicant crypto-asset service provider intends to provide advice on crypto-assets or portfolio management of crypto-assets, proof that the natural persons giving advice on behalf of the applicant crypto-asset service provider or managing portfolios on behalf of the applicant crypto-asset service provider have the necessary knowledge and expertise to fulfil their obligations;
where the applicant crypto-asset service provider intends to provide transfer services for crypto-assets on behalf of clients, information on the manner in which such transfer services will be provided;
the type of crypto-asset to which the crypto-asset service relates.

The details of managers must be provided to Finantsinspektsioon via the fit and proper assessment form.

In addition to the above, Finantsinspektsioon’s guidelines, which can be found on the website of Finantsinspektsioon, must be taken into account when preparing the materials required for applying for authorisation and in subsequent activities.

A person offering, or seeking the admission to trading, of other crypto-assets has the right to operate as a participant in markets in crypto-assets if the conditions laid down in Articles 4(1) and 5(1) of MiCA are met.

The application must be submitted in Estonian. If the applicant intends to submit documents in English, it must be clearly stated in the application.

Finantsinspektsioon may demand additional information and documents if it is not convinced on the basis of the submitted information and documents as to whether the applicant for authorisation has adequate facilities for the provision of crypto-asset services or whether it meets the requirements of legislation, or if other circumstances relating to the applicant need to be verified.

Finantsinspektsioon will assess whether the application for authorisation for other crypto-asset services is complete within 25 working days. Finantsinspektsioon informs the applicant of whether the application is complete or incomplete. If Finantsinspektsioon has come to the conclusion that the application for authorisation is complete, Finantsinspektsioon will assess within 40 working days whether the applicant crypto-asset service provider meets the requirements of MiCA and CMA. The aforementioned time limit may be paused for up to 20 working days. The applicant will be informed about it within five working days after making the decision.

Processing fee

The processing fee payable when applying for authorisation of a crypto-asset service provider, issuer of an asset-referenced token or e-money institution is 3,000 euros.

Cross-border provision of crypto-asset services

If a crypto-asset service provider intends to provide crypto-asset services in more than one Member State, the following information to the competent authority of the home Member State must be submitted:

a list of the Member States in which the crypto-asset service provider intends to provide crypto-asset services;
the crypto-asset services that the crypto-asset service provider intends to provide on a cross-border basis;
the starting date of the intended provision of the crypto-asset services;
a list of all other activities provided by the crypto-asset service provider not covered by MiCA.

A crypto-asset service provider may begin to provide services in the Member States set out in the notification from the day when the competent authority of that State has received the notification of Finantsinspektsioon or at the latest after 15 calendar days have passed from the submission of the information to Finantsinspektsioon. No processing fee is to be paid upon notification of cross-border provision of services.