The crypto-asset service
In the EU, the exchange itself is a crypto-asset service under the Markets in Crypto-Assets Regulation. The Regulation defines the exchange of crypto-assets for funds as the conclusion of purchase or sale contracts concerning crypto-assets with clients for funds using the provider's own capital, and the exchange of crypto-assets for other crypto-assets in the same way. An on-ramp that sells to customers from its own inventory is exchanging crypto-assets for funds; one that matches customers' orders with other parties may instead be executing orders or operating a trading platform. If the on-ramp also holds customers' crypto-assets, it provides custody and administration, and if it sends them to an address the customer nominates, it provides transfer services. Each service must be named in the application, and a provider authorised for exchange or custody falls in the second capital class, with a permanent minimum of EUR 125 000 or one quarter of its fixed overheads if higher.
Since the MiCA transitional periods ended on 1 July 2026, a firm that provides these services to clients in the EU must be authorised as a crypto-asset service provider, or be an authorised financial entity that has notified its competent authority. The authorisation is passported across the EU. Our notes on what the MiCA application requires and MiCA passporting set out the process.
The fiat side: payment services and e-money
MiCA authorisation does not cover the movement of fiat money. The Regulation requires a crypto-asset service provider to place clients' funds, other than e-money tokens, with a credit institution or a central bank by the end of the business day following their receipt, in an account separately identifiable from its own, and it permits the provider to offer payment services connected with its crypto-asset services only where it, or a third party it uses, is authorised under the Payment Services Directive. Receiving funds from a customer for a purchase and paying out the proceeds of a sale are part of the exchange, but a provider that transfers fiat funds to third parties, holds fiat balances that customers can spend, or issues cards connected with the account is providing payment services or issuing electronic money.
The distinction between the two fiat licences follows the product. A provider that moves money for customers needs authorisation as a payment institution; one that holds fiat balances customers can use to pay others needs authorisation as an electronic money institution, with higher initial capital of EUR 350 000. Our note on EMI or payment institution explains the test. Many groups obtain one of these licences in an entity alongside the CASP, or use an authorised payment or electronic money institution under contract for the fiat legs.
E-money tokens
E-money tokens, the crypto-assets that reference a single official currency, sit across both regimes. MiCA deems them to be electronic money, and only a credit institution or an electronic money institution may offer one to the public or seek its admission to trading as issuer. An on-ramp that issues its own stablecoin referencing an official currency therefore needs to be, or to work with, an issuer authorised in one of those ways. An on-ramp that only buys, sells or holds e-money tokens issued by others does not need the issuer's authorisation, but the European Banking Authority has concluded that transferring e-money tokens for clients, and holding them in custodial wallets that can send and receive to third parties, are also payment services, and since 2 March 2026 national authorities have been advised to require authorisation under the Payment Services Directive for them. Our note on e-money token services and PSD2 sets out the services affected.
When MiFID applies
MiCA does not apply to crypto-assets that qualify as financial instruments under MiFID II. A token that confers rights equivalent to shares or bonds, or that is itself a derivative, is regulated under MiFID II, and dealing in it, executing orders in it or operating a venue for it requires authorisation as an investment firm or market operator. ESMA's guidelines on the qualification of crypto-assets as financial instruments, published on 19 March 2025, set out how competent authorities should make the assessment, and they state that perpetual futures should be treated as derivative contracts despite having no expiry. An on-ramp that offers only spot purchases of crypto-assets that are not financial instruments does not need MiFID authorisation; one that adds leveraged products or tokenised securities does. Our note on crypto derivatives and perpetual futures covers that case.
The UK position
The UK regime is in transition. Until the new regime comes into force, a business that exchanges cryptoassets for money or money for cryptoassets, exchanges one cryptoasset for another, or safeguards cryptoassets or the private keys to them, by way of business in the UK, must register with the FCA under the Money Laundering Regulations before it begins, as a cryptoasset exchange provider, a custodian wallet provider or both. Firms that are already authorised for other services, including payment and electronic money institutions, must also register if they provide these services. The fiat legs are regulated as in the EU, under the Payment Services Regulations and the Electronic Money Regulations.
Since 8 October 2023, promotions of cryptoassets that are capable of having an effect in the UK must be communicated by an authorised firm, approved by an authorised firm with permission to approve them, made by a registered cryptoasset business under its own exemption, or fall within another exemption; any other promotion breaches section 21 of the Financial Services and Markets Act 2000. The FCA has warned registered on-ramp providers, payment and electronic money institutions and authorised firms that provide on-ramp or payment services to unregistered cryptoasset firms that they may be benefiting, directly or indirectly, from illegal promotions, and that maintaining such relationships may call their probity into question.
From 25 October 2027, when the new regime is due to come into force, dealing in qualifying cryptoassets as principal or agent, arranging deals in them and safeguarding them will require permission under Part 4A of the Act, and registration under the Money Laundering Regulations will not convert into that permission. The FCA's application window for firms that want to continue without interruption runs until 28 February 2027. Our page on FCA cryptoasset authorisation and our note on what the application needs set out the requirements.
Bringing the authorisations together
Because the customer sees one service, the applications must describe one business. The flow of funds, the safeguarding of fiat and crypto-assets, the customer onboarding and the financial crime controls appear in each application, and a regulator that sees them described differently in two applications will ask why. The structure, whether a single group with a CASP and an electronic money institution, a CASP that uses an authorised partner for its fiat services, or a phased approach, should be decided before any application is prepared, together with the jurisdictions in which each entity will be established.
How we can help
We advise on the structure of on-ramp and off-ramp businesses and prepare the CASP, payment and electronic money and UK applications they require. See crypto on-ramps and off-ramps, or speak to us.
Sources
- Regulation (EU) 2023/1114 on markets in crypto-assets, Articles 2, 3, 48, 59, 67 and 70, as published on EUR-Lex
- ESMA, Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments, 19 March 2025
- Financial Conduct Authority, Cryptoassets: who needs to register
- Financial Conduct Authority, Cryptoasset financial promotions and fiat-to-crypto on/off ramp services, and statement of 9 October 2023
Checked 17 October 2026.