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On 2 May 2024, the Central Bank of Ireland signalled a change
in its approach to registering Virtual Asset Service Providers
(VASPs) / authorising Crypto Asset Service
Providers (CASPs) in Ireland.
Given that the Markets in Crypto Assets Regulation
(MiCA) will apply to CASPs from 30 December 2024
and a period of at least ten months is required to conclude the
assessment of an application for the registration of a VASP, the
Central Bank considers that firms intending to provide crypto asset
services should concentrate on preparing for a CASP application
rather than seeking a VASP registration.
Background
Since April 2021, firms seeking to provide any VASP activities
are required to be registered by the Central Bank as a VASP prior
to commencing operations.
The current VASP regime relates solely to Anti-Money Laundering
(AML), Countering the Financing of Terrorism
(CFT) and Financial Sanctions
(FS). Applicant VASPs are assessed only on the
effectiveness of their AML/CFT/FS frameworks, policies and
procedures and the fitness and probity of management and beneficial
owners.
A CASP authorisation under MiCA will be significantly broader
and more substantial than a VASP registration.
Transitional Period under MiCA
Under MiCA, firms registered and operating under the VASP regime
before 30 December 2024 can avail of a transitional period to
continue to operate for up to 12 months or until their CASP
authorisation is granted or refused, whichever is sooner. This is
known as “grandfathering”.
Only firms that have been registered as VASPs, and provided
their services in accordance with applicable law prior to 30
December 2024 can avail of the MiCA transitional arrangements.
All registered VASPs that intend to continue to operate
following the 12-month transitional period, i.e., after 30 December
2025, will require a CASP authorisation from the Central Bank prior
to this date.
A VASP availing of the transitional arrangements that does not
apply for a CASP authorisation or whose application is refused will
be required to cease VASP operations by 30 December 2025 or when
their CASP application is refused, whichever is sooner.
VASP registration is no guarantee of CASP authorisation
The Central Bank has flagged to CASP applicants that a VASP
registration provides no indication of the outcome of a CASP
assessment. Moreover, a VASP registration does not lead to a
simplified CASP assessment. The Central Bank views that all CASP
applications will be deemed a new authorisation application and
will be assessed under MiCA rules. However, of potential comfort to
registered VASPs is the Central Bank’s assertion that it will
take existing supervisory history and engagement with a firm into
consideration as part of the authorisation assessment.
Other
The Central Bank states that VASP applicants who have engaged
with the Central Bank on a pre-registration basis have been advised
of this in recent months.
For further information on MiCA please see our client briefing
here.
How we can help
Our Financial Regulation team is already supporting firms who
will be applying for authorisation under MiCA and has extensive
experience securing the registration of VASPs and the authorisation
of electronic money institutions, payment institutions and other
regulated Fintechs. We have acted for one-third of the electronic
money institutions which have been granted authorisation in Ireland
to date.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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