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CEO of AMLBot on MiCA compliance: '75% of VASPs will need to cease their operations'

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CEO of AMLBot on MiCA compliance: '75% of VASPs will need to cease their operations'
Web3/Crypto
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Slava Demchuk, Co-founder and CEO of AMLBot | X

Slava Demchuk, CEO of AMLBot, said that the implementation of the Markets in Crypto-Assets Regulation (MiCA) will compel 75% of virtual asset service providers (VASPs) in the European Union to halt operations due to compliance challenges. This assertion was made in an Op-Ed published on March 13.

"The MiCA regulation is, in essence, a good legal framework for the crypto industry, but it also has some disadvantages, especially for crypto startups and small businesses," said Demchuk, Co-Founder and CEO. "Looking at the case of Estonia and its implementation of crypto licenses in 2017, it is possible to predict that around 75% of VASPs will need to cease their operations in the EU. Acquiring a MiCA license is expensive… typically around 30,000-80,000 euros, depending on the business model and country of incorporation. Where does that leave the small businesses and the startups? They will not be equipped to comply with MiCA."

According to the European Securities and Markets Authority (ESMA), MiCA is a comprehensive legal framework established by the European Union to regulate crypto-assets and related services. The regulation aims to enhance consumer protection, ensure financial stability, and foster innovation within the crypto market. It introduces uniform rules across EU member states, covering aspects such as transparency requirements, authorization, and supervision of crypto-asset service providers.

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Legal Nodes reports that MiCA's implementation is expected to impose substantial compliance costs on crypto-asset service providers (CASPs). These costs include licensing fees ranging from €30,000 to €80,000, depending on the business model and country of incorporation. Additionally, CASPs must establish robust operational frameworks including anti-money laundering (AML) and know-your-customer (KYC) procedures, data protection measures, and cyber resilience strategies. This necessitates hiring specialized personnel.

As reported by the Wall Street Journal, companies like Binance and Coinbase continue to face regulatory challenges despite significant investments in compliance. Binance has allocated over $213 million to its KYC and AML programs, securing 21 regulatory approvals including registration with India's Financial Intelligence Unit. Similarly, Coinbase has expanded its global compliance initiatives but remains entangled in legal disputes in both the U.S. and Europe. These obstacles highlight the intense regulatory scrutiny faced even by highly compliant cryptocurrency exchanges.

Demchuk is also the co-founder of AMLBot, a company specializing in anti-money laundering compliance solutions for the cryptocurrency industry. With a background in financial compliance and blockchain analytics, he has been instrumental in developing tools that assist crypto businesses in adhering to regulatory standards. His expertise positions him as a thought leader in navigating the evolving landscape of crypto regulation.

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