_FINANCIAL-OPERATIONS/

Preparing for MiCA

January 7, 2026By Thierry Coopman · Product Specialist

Regulation

Stablecoins

We recently published an article on what digital asset regulation (like MiCA and GENIUS) means for stablecoin issuers and why this regulation is actually a good thing. And now, it’s time to get on board.

The end of MiCA’s transition period, or “grandfathering” period, is either quickly approaching or just passed for crypto-asset service providers (CASPs) and stablecoin issuers in the EU. This means that companies still conducting crypto-asset related services without fully aligning their practices with MiCA’s framework will need to prepare their MiCA-compliant license materials or stop conducting business in the coming months.

For those still in this transition phase, now is the time to determine which requirements still need to be met and how to start implementing MiCA’s version of stablecoin compliance.

When Does MiCA’s Transition Period End?

MiCA’s grandfathering period began on December 30, 2024, for CASPs that were officially authorized under their national regimes. This grandfathering period allows CASPs already operating in certain EU Member States to continue doing business without a MiCA license until July 1, 2026. However, this date varies among member states. For example, in Germany and Ireland the transition period ends at the end of December 2025, while Finland opted for a shorter MiCA transition period that ended on June 30, 2025.

Still, many member states, such as France, Spain, and Romania, are allowing CASPs and stablecoin issuers to have the full period of transition to adjust to MiCA’s new crypto-asset regulation. Of course, it’s absolutely crucial to check your member state’s official documentation for exact dates and potential changes.

It’s also important to stay informed of the end dates for grandfathering periods of member states that you conduct business with. Entities that are still within their grandfathering period are prohibited from providing cross-border services to countries where the grandfathering period has ended. This is yet another reason to expedite your MiCA licensing.

What Does the End of MiCA’s Transition Period Mean for CASPs and Stablecoin and E-Money Token Issuers?

The bottom line is that you must be fully licensed under MiCA by the end of the transition period. If not, you’ll be forced to shut down any and all crypto-asset services within the EU—and authorities will not give extensions after the end date. At this point, all CASPs and stablecoin issuers operating in the EU must:

•Hold a MiCA license from their home member state’s National Competent Authority.

•Have a submitted whitepaper providing a disclosure about the issuer’s identity, the function and purpose of the asset, investor rights, and outlining any potential risks. The European Securities and Markets Authority (ESMA) offers a manual on white paper requirements here.

•Have crypto-assets backed 1:1 by liquid assets, securely held by a third-party external custodian. The trusted custodian ensures these assets aren’t used for anything else.

•Provide fair, clear client communication and disclosures, and manage conflicts of interest.

•Have strong internal controls, risk management, and transparent ownership/management structures in place.

•Implement Anti-Money Laundering (AML)/Know Your Customer (KYC) programs, with transaction monitoring protocols, customer checks and verification processes, and obligations for reporting suspicious activities and disclosing transaction information to authorities when necessary.

•Meet capital requirements, which range from EUR 50,000 to EUR 150,000, depending on the type of the crypto-asset services provided.

•Be prepared for necessary audits by maintaining proof of reserves for crypto-assets and compliance of the custody service.

•Implement effective measures to maintain detailed, secure, and accessible records of all services, activities, orders, and transactions.

•Be DORA compliant.

Of course, these are all measures that require adoption and implementation over time and are not meant to change the night before the end of the transition period. In most cases, the earlier these measures are taken, the better prepared you will be for any snags in the process.

This means firms should start (or should have already started) gathering the substantial crypto-asset regulatory documentation needed for a MiCA license now. They should also be implementing operational procedures around maintaining detailed records, governance, and AML/KYC programs now.

The Payment Stablecoin & E-Money Token Compliance Gaps That Go Unnoticed—And Lead to Crypto-Asset Regulation Issues

Regardless of when firms start the adoption and implementation of MiCA requirements, a smooth transition is preferable. This requires careful adherence to the details in MiCA, and being aware of the common (and often hidden) technical challenges. Some common difficulties include:

•On-chain and off-chain ledger reconciliation: Reconciliation is required between on-chain ledgers and off-chain ledgers, like centralized systems, exchanges, internal records to ensure accuracy and prevent fraud. Technical abilities relating to matching records, immutable ledgers, identifying discrepancies, and correcting errors using automated tools can sometimes be overlooked, leaving CASPs and stablecoin issuers with major gaps in their MiCA compliance abilities.

•Real-time stablecoin reserve visibility: MiCA has strict transparency requirements, mandating that issuers maintain liquid assets and publish regular, detailed reports. Yet, some issuers lack appropriate technologies for providing real-time insights into holder balances and transaction volumes. These are essential for audits under MiCA for determining whether reserves are equal to the amount of stablecoins in circulation.

•Attribution and traceability of flows: Transparency is a key part of MiCA legislation and is enforced partially through the tracking of transaction data. CASPs and stablecoin issuers must have ledgers capable of funds traceability and tracking and maintaining records of this information.

•Fragmented systems: MiCA requires integrated governance and IT systems that can provide a “single source of truth” for EU-wide reporting. However, some firms are still using internal oversight systems that are fragmented, leading to poor data flow and trouble providing real-time monitoring or consistent client asset safeguarding.

How the Formance Ledger Streamlines Stablecoin Compliance

In short, MiCA’s crypto-asset regulation requires CASPs and stablecoin issuers to keep track of their transaction data, provide real-time reserve visibility and have reliable ledger reconciliation abilities. In the little time left before the end of MiCA’s transition period, firms must set up the infrastructure for these capabilities and ensure integration with any existing systems.

Our centralized, programmable, account-based Formance Ledger offers a simplified system that makes all of this possible with features like immutable logs and real-time balances that ensure firms can get their MiCA license on time and are audit-ready. However much time you have left before the end of MiCA’s grandfathering period, Formance can help get you closer to effective stablecoin compliance.

Thierry CoopmanProduct Specialist