How to Choose the Right EU Jurisdiction for a MiCA CASP Application

The European Union has created a comprehensive and unified framework for authorizing crypto-asset service providers (CASPs). It’s the Markets in Crypto-Assets (MiCA) Regulation, and it allows international fintech companies to apply for CASP authorization at any EU member state and, with passporting, operate everywhere else in the EU.

This begs the question: Which is the best EU jurisdiction for a CASP application?

When expanding your crypto operations into Europe, one of the most critical steps is learning how to choose a MiCA jurisdiction that balances ease of doing business with a mature regulatory framework.

On the one hand, you want a jurisdiction with straightforward requirements and quick processing turnaround times. On the other hand, you want a jurisdiction with a reputable regulator and a local framework that is already aligned with MiCA Regulations to ensure re-registration or re-authorization is less likely to be required at a later date.

Of course, your priorities will ultimately determine which makes the best jurisdiction for  your business, and we can help you make this choice.

As a law firm based in the EU, with years of experience providing licensing support to international fintech companies, Legalaes is in an excellent position to serve as your guide during your EU expansion.

We prepared this article to provide you with a general overview of how to compare CASP jurisdictions in Europe. Read on to learn how to choose a MiCA jurisdiction and factors to consider before filing a MiCA application at any EU member state.

Key Takeaways

• The European Union is transitioning to the MiCA Regulation’s CASP licensing framework.
• EU member states are at varying stages of MiCA integration.
• The Czech Republic, especially with Legalaes’ ready-made licensing solutions, has one of the shortest licensing timelines.
• Cyprus has officially adopted the MiCA CASP licensing framework.
• Local substance requirements vary significantly, ranging from flexible setups with no physical office mandated to strict physical office and local personnel requirements.

Table of Contents

• How to Choose a MiCA Jurisdiction: Factors to Consider
• A MiCA Jurisdiction Comparison for Crypto Firms
• Frequently Asked Questions
• The Best EU Jurisdiction for a CASP Application

How to Choose a MiCA Jurisdiction: Factors to Consider

If you’re a fintech firm from a non-EU territory like Dubai or Abu Dhabi, where in the EU should you apply for a MiCA crypto license?

Answering this question competently requires learning about the CASP licensing procedures, processes, and regulations of every MiCA jurisdiction you’re considering as a potential base of operations in the European Union.

Actionable Tip: A shortcut would be to directly consult a law firm that offers fintech licensing services. In our experience, this is the best option when choosing a MiCA jurisdiction, because it will significantly cut your decision and preparation time.

We at Legalaes have sat across the table from many regulators across the EU. We can offer you legal and procedural support for MiCA CASP and other types of fintech licenses. We will provide you with jurisdiction recommendations tailored to your specific circumstances and requirements.

A MiCA jurisdiction comparison for crypto firms is essential before you can decide on the best EU jurisdiction for a CASP application. We suggest weighing these factors to consider before filing a MiCA application in any of the EU member states

Regulatory Framework

The MiCA Regulation has entered into force, but it’s being executed in stages across the EU. Many EU member states are grandfathering their legacy virtual asset service provider (VASP) license in favor of the newer CASP license but, in practice, full implementation is naturally taking time.

Actionable Tip: Look at the currently applicable licensing regulations and processes in EU jurisdictions. A mistake newcomers make is not considering MiCA Regulation integration progress. In our experience, the more aligned a local CASP licensing framework is with the MiCA Regulation, the better if you’re in the EU for the long haul.

Ultimately, all member states will be using the MiCA CASP licensing framework, so we advise our clients to be ahead of the curve.

Share Capital Requirements

The MiCA Regulation is clear about the share capital requirements among companies offering crypto-asset services.

• EUR 50,000 for Class 1 providers
• EUR 125,000 for Class 2 providers
• EUR 150,000 for Class 3 providers

That said, EU jurisdictions have varying compliance requirements.

Actionable Tip: Look for a jurisdiction that offers companies more flexibility in fulfilling share capital requirements if you’re just testing the waters. A mistake we see frequently is fintech companies tying up their capital when they’re still exploring their options. If this is you, opt for low capital requirements, test operations and, later, you can switch jurisdictions.

Physical Presence, Substance, and Personnel

MiCA requires crypto-asset service providers to have an operational, staffed physical office in their EU home member state. However, for now, some jurisdictions do not require a physical office.

Actionable Tip: Look for a jurisdiction that allows fintech companies to apply for a CASP license even if they don’t have a physical office. This can help you save up on company set-up costs.

That being said, note that even in jurisdictions that do not require a physical office, a crypto-asset service provider may have to set one up anyway; local banks may require a physical office before allowing companies to open bank accounts, which brings us to the next point.

Bank Account Requirements

Some MiCA jurisdictions deem a bank account with a local bank essential to CASP licensing, while others allow CASP authorization even without a local bank account. Bank account requirements, therefore, have always been an important factor when deciding on a MiCA jurisdiction.

Actionable Tip: For quick processing and setup, consider opting for a jurisdiction that does not require you to open an account with a local, traditional brick-and-mortar bank. Having orchestrated the EU setup and licensing of many fintech clients, approvals are easiest in jurisdictions that allow accounts in EU-based electronic money institutions (EMIs).

Application Timeframes

Application timeframes are crucial. The longer you must wait for a CASP license, the higher the opportunity cost incurred.

Actionable Tip: Look for an EU jurisdiction with a responsive licensing authority and shorter application timeframes. Agility has always been one of the factors shared by the many successful fintech company setup and licensing projects we’ve handled.

Taxation Environments

EU member states impose different taxes and tax rates. You must consider a jurisdiction’s tax regime for corporate income tax, dividends and withholding taxes, value-added tax, and employee/social taxes.

Actionable Tip: Look for a jurisdiction that imposes the least financial burden through taxation. In our experience, stricter compliance is a good tradeoff if the tax burden is lighter.

A MiCA Jurisdiction Comparison for Crypto Firms 

We have conducted a MiCA jurisdiction comparison for crypto firms to determine the best EU jurisdiction for a CASP application based on the factors we listed above. Below are the top jurisdictions for MiCA CASP licensing.

Disclaimer: The following are our recommendations based on current practices and regulations. Since EU member states are still transitioning towards their version of a MiCA-based CASP licensing regulatory framework, prevailing policies (and thus the best EU jurisdictions) could change.

1. The Czech Republic

Best for: Crypto companies that want speed and flexibility.

This EU member state has always had a robust legal framework for licensing virtual asset service providers (VASPs). The MiCA Regulation can only improve it by tightening its anti-money laundering and countering terrorism financing (AML/CTF) measures.

Other things that make the Czech Republic a top choice of EU jurisdiction for MiCA CASP licensing:

• The Czech Republic requires no physical office; a legal address suffices.
• Applicants can have foreign directors.
• No local anti-money laundering (AML) compliance officer is required, but it is recommended for higher (and future) compliance.
• The CASP license application process is exceptionally fast; it is possible to acquire a crypto license in the Czech Republic in just two to three weeks with our ready-made solution.
• CASPs can open an account with EU-based banks and EMIs.

2. Poland

Best for: Crypto companies looking for cost-efficiency, favorable tax rates, and flexible personnel requirements.

Poland has a three-class system aligned with the MiCA CASP framework. Applying for a crypto license in Poland means stability, as you’re less likely to need to make adjustments to your company set-up at a later time.

The following are Poland’s CASP licensing advantages:

• The share capital requirement of PLN 5,000 for company registration is highly accessible, although MiCA share capital top-ups are required before applying for a CASP license.
• No physical office is required; a legal address is sufficient for company formation and licensing.
• An AML compliance officer is required; they can reside anywhere in the EU or the European Economic Area (EEA), although a resident of Poland is preferred.
• The company directors may be from anywhere in the EU/EEA, although Poland may require a Poland-based director in the future.
• Poland charges a low corporate income tax rate of 9% for revenues up to EUR 2 million.
• CASPs can open an account with EU-based banks and EMIs.

Note: CASP licensing timelines can take three to five months.

3. Latvia

Best for: Crypto companies that plan to aggressively scale their EU operations.

Latvia now adheres to the MiCA CASP licensing framework, particularly its share capital thresholds. Obtaining a crypto license in Latvia means you can future-proof your EU operations.

Latvia also offers the following advantages to crypto-asset service providers:

• Latvia has an exceptionally favorable tax regime, with a 0% corporate tax on retained or reinvested earnings; crypto companies can reinvest their revenues in their company for aggressive growth.
• The jurisdiction requires only EUR 2,800 share capital for initial company incorporation, but CASP licensing applicants must adhere to the MiCA share capital thresholds.
• It does not require a physical office, but a registered legal address is mandatory.
• The appointment of an AML compliance officer is mandatory; local residence is encouraged.
• Directors do not need to reside in Latvia.
• A corporate bank account in Latvia or another EU/EEA country is advisable but not a requirement at registration.

Note: Regulatory review takes around two to six months. Latvia also has strict governance requirements.

 4. Slovakia

Best for: Crypto companies looking for a flexible but MiCA-aligned regulatory framework.

Slovakia has adopted the three CASP classes of the MiCA Regulation. Consider applying for a crypto license in Slovakia if you want a MiCA-aligned jurisdiction with flexible address requirements.

Slovakia has the following advantageous features:

• Slovakia has a low initial capital requirement of EUR 5,000 for company formation, although compliance with MiCA Regulation’s share capital thresholds is required when applying for a CASP license.
• A physical office in Slovakia is not required.
• The appointment of an AML compliance officer is mandatory; AML compliance officers can reside anywhere in the EU, but appointing a local AML officer is encouraged.
• Company directors can be a Slovakian or an EU citizen.
• Slovakia imposes a 15% corporate income tax for companies with an income under EUR 49,790.
• CASPs can open an account with EU-based banks and EMIs.

Note: Licensing can take three to five months. As a workaround, you can work with Legalaes. We have ready-made companies with a VASP license. They can shorten your time to entry into the Slovakian and the EU market.

5. Cyprus

Best for: Crypto-companies seeking a good regulatory ecosystem and a competitive tax regime.

Cyprus has officially adopted the MiCA regulatory framework. It is an excellent jurisdiction for forward-looking crypto entities that want to start their EU operations with a MiCA-compliant EU company.

Of course, full MiCA adoption means stricter AML/CTF requirements, the need for a local physical presence and personnel, and higher share capital requirements. However, eventually, all EU jurisdictions are expected to move towards MiCA alignment. Obtaining a CASP license in Cyprus now means early MiCA compliance and fewer headaches later.

In Cyprus, moreover, the standard corporate tax rate is a flat 12.5%. This is one of the lowest corporate tax rates in the EU.

Note, however, that Cyprus has stringent banking requirements. Crypto-asset service providers must have a corporate bank account with a local bank to meet Cyprus’s regulatory and AML/CTF standards. It shouldn’t be much of a hurdle, however, if you’re working with us, as Legalaes can help you with that. 

Note: The CASP licensing process timeframe in Cyprus is three to six months.

Frequently Asked Questions

What makes one EU jurisdiction more suitable than another for MiCA?

One EU jurisdiction is often more suitable than another based on the maturity of its regulatory infrastructure and the specific nature of a company’s crypto-asset activities. Factors like the minimum share capital, local substance requirements, and the speed of the national regulator’s review process significantly influence the choice of the best EU jurisdiction for CASP application.

When performing a MiCA jurisdiction comparison, crypto firms can prioritize EU member states with a reputable regulator and a framework aligned with MiCA CASP licensing regulations. Crypto-asset service providers also need to evaluate operational costs, the tax regime, and local substance requirements.

Should founders prioritize timing, banking access, or regulator profile?

Founders must balance timing, banking access, and regulator profile based on their commercial stage. The application timeframe is often shortest in the Czech Republic (two to three weeks), while the most robust regulator profiles and banking access are found in Germany (Bundesanstalt für Finanzdienstleistungsaufsicht or BaFin) and Cyprus (Cyprus Securities and Exchange Commission or CySEC). 

Learn how to choose a MiCA jurisdiction by considering these specific trade-offs:

Capital Efficiency: Initial capital requirements vary across jurisdictions. While most align with MiCA classes (EUR 50,000-150,000), some jurisdictions (.e.g, Poland) have a lower initial capital requirement for company formation and allow companies to increase their capital when applying for a CASP license.

Timing: If speed is critical, the Czech Republic offers the shortest setup times. You can also work with Legalaes and set up in jurisdictions where we have ready-made companies for a faster market time-to-entry.

Regulator: For institutional credibility, Germany’s BaFin is considered tier-one. However, licensing can take from eight to 10 months.

Banking Access: Jurisdictions like Cyprus and Lithuania have crypto-friendly electronic money institutions (EMIs) and banks.

How important is local substance when choosing a jurisdiction?

Local substance is a critical factor because MiCA requires an EU-established structure with real governance and operational capacity. While some countries like Poland do not currently require a physical office, others like Cyprus and Germany demand a physical presence staffed by local employees to meet tax residency and supervisory expectations.

Does passporting make jurisdiction choice less important?

While MiCA passporting allows a CASP license in Malta, Estonia, or any other EU member state to operate in all other EU member states, this does not make the initial choice of jurisdiction less important. Your chosen jurisdiction dictates your operational costs, tax liabilities, and the level of institutional trust you hold with banks and enterprise partners.

The regulator of your EU home member state also remains the sole authority for ongoing supervision and reporting. Key factors to consider before filing a MiCA application at a particular jurisdiction include:

Licensing Timelines: Even with passporting, the time to market is governed by local review speeds, which can range from three to 10 months, depending on jurisdiction. The ready-made CASP solution from Legalaes can significantly cut licensing timelines.

Supervisory Reputation: A crypto license in Germany and other tier-one jurisdictions provides a decisive advantage in banking access and partner onboarding.

Operational Maintenance: Jurisdictions with less restrictive local substance requirements can cut operating costs. 

Tax Efficiency: Some countries, such as Latvia and Estonia, offer 0% tax on reinvested profits.

What mistakes do firms make when comparing EU options?

When comparing EU options, fintech firms often struggle with balancing requirements and priorities. Some focus purely on speed rather than long-term operational viability, while others neglect the regulatory ecosystem and regulator reputation for less restrictive local substance requirements. Finally, some underestimate the importance of legal advice and guidance from a law firm specializing in fintech licensing services.

The Best EU Jurisdiction for a CASP Application

What’s the best EU jurisdiction for a CASP application? It depends on your priorities. If it’s alignment with the MiCA Regulation, Cyprus and Slovakia are clear contenders. If it’s speed of set-up, shorter time to entry, and low local substance requirements (for now), the Czech Republic is an excellent option.

For professional guidance on how to choose a MiCA jurisdiction, contact Legalaes.