Key Contacts: Andrew Tzialli – Partner
VASP and MiCA
Until recently, it was unclear whether companies in Ireland registered as a VASP would have to also register as a Crypto Asset Service Provider (CASP), under MiCA. In May 2024, the Central Bank of Ireland (CBI) provided guidance suggesting that any firm considering a VASP application, should hold-fire and instead focus on getting prepared for its CASP application pursuant to MiCA (which becomes a requirement from 30th December 2024).
Still, an advantage existing registered VASP firms will have is that they will be granted a further 12 month “grandfathering” period (or an extended period until their MiCA application is accepted or refused) from 30th December 2024 in order to obtained their CASP authorisation. Only those registered VASP entities that have been compliant with applicable VASP rules prior to 30th December 2024, may avail of this 12-month transitional period. Irish law-makers are expected to pass new legislation later this year to further clarify how the relationship between VASPs and CASPS, and the need for new applicants to only proceed with the CASP (MiCA) regime.
Existing and prospective VASP holders/applicants should be mindful that an existing registration does not lead to a guaranteed authorisation nor necessarily an easier path under the CASP MiCA regulations (note, the registration requirements for CASPs are far more substantive than under the VASP legislation which itself focuses almost entirely on AML/KYC and Countering the Financing of Terrorism). Still, should the CBI already have an existing supervisory relationship with a registered VASP and have detailed knowledge of their business, some aspects of the CASP process should be more streamlined as a result.
Can a VASP appoint a sub-licensee or agent to operate as a VASP on its behalf?
Over the last few months, we have had a number of approaches from international companies exploring whether a VASP registered in Ireland can “sub-licence” its VASP authorisation.
Some view such an activity as one that would fall into a legislative grey area. Unlike other EU legislation governing payment services providers and E-money issuers for example (which have regimes for sub-agents and primary/secondary issuers), there is nothing explicit in relation to this within the VASP guidance. Still, as legal advisors to such companies, our advice has thus far been that a company cannot rely on being permitted to engage in a certain activity, simply by virtue of the absence of any legislation specifically saying that it cannot engage in said activity. Ultimately, VASP registration is specific to the applicant VASP entity only and there are no provisions in the VASP rules that allow for transfer to another entity. The legislation does not provide for any sub-licensing as a method of operating in the absence of obtaining a registration.
It’s also worth noting that registration granted to a firm is only in respect of the activities it lists in the application form – so in theory if it wished to sub-license its authorisation to a company providing an activity outside of the scope of what is a permitted activity for the authorised company, this is would not permitted without formal CBI approval (which is highly unlikely to be granted). If a registered VASP began engaging sub-agents or sub-licensees, such activity would be deemed a material change of business that would require notification to the CBI.
Ultimately, any entity intending to operate across any one of the 5 activities in Ireland that constitute VASP activity, requires its own personal VASP registration to do so. The concept of VASP sub-licensing is not a concept the CBI (nor the VASP legislation) recognises and therefore, if a firm is operating as a VASP in Ireland through a method in which they believe they have been granted a sub-licence/sub-agency, the CBI would view such a firm as being unauthorised and this would be dealt with by the unauthorised provider unit in the CBI.
Therefore, both the registered VASP entity providing any purported “sub-licensing” and the entity seeking to the rely on any perceived sub-licence/agency, will be in breach of VASP rules and will be sure to find themselves in an unwanted position on the CBI’s radar.
If you require assistance or advice on VASPs, MiCA or any MiCA application, please contact Andrew Tzialli.
