Trade Republic Receives Mica License: Revolution in Crypto Trading!

Trade Republic Receives Mica License: Revolution in Crypto Trading!

The Federal Financial Supervisory Authority (BaFin) has granted Trade Republic a license in accordance with the Mica Regulation. This means that the broker can now offer expanded cryptocurrency services, in particular digital asset trading, custody and transfer services. This development is significant because it allows Trade Republic to legally provide custody of its customers' crypto assets and introduce new features such as direct exchange of cryptocurrencies and transfers to external wallets. Until now, customers have not been able to transfer their crypto assets to private wallets. The investment further reports that Trade Republic works with Bitgo Europe for custody and uses the British crypto exchange B2C2 for trading.

The Mica Regulation, which came into force in 2023, aims to establish a uniform legal framework for cryptocurrencies within the EU. This is done with a focus on risk-appropriate regulation and increased investor protection. The license enables Trade Republic to carry out so-called “passporting”, which means that services can be offered in all EU member states without additional national authorizations. The regulations on asset-referenced cryptoassets and e-money tokens (stablecoins) are expected to come into force in July 2024, while the majority of the regulation will already apply in early 2025, according to the BaFin.

Market development and effects for customers

Trade Republic currently offers its customers over 50 digital assets and has reached a customer base of over eight million in 17 European markets. Transactions with crypto assets are subject to licensing requirements as a financial service in Germany. The broker currently does not charge any direct fees for custody, but there are individual costs of one euro per transaction and spreads of up to 2 percent. For transactions over 1,000 euros, there is also a legal obligation to identify the owner of the “unhosted wallet” in order to ensure money laundering prevention.

The granting of the Mica license creates greater legal certainty for innovations in the area of ​​distributed ledger technologies. Providers of crypto assets are required to prepare a white paper and submit it to the relevant regulatory authorities. The new regulations also focus on all common cryptocurrencies such as Bitcoin and Ethereum, while security tokens and NFTs are generally not covered by the Mica regulation.

BaFin is working together with European supervisory authorities to prepare technical regulatory implementing acts as well as guidelines for the implementation of this regulation. Providers with more than 15 million active users are considered significant providers and are subject to increased supervision. This will be complemented by the introduction of a “blacklist” for providers who do not meet Mica requirements.