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The #MiCA (Markets in Crypto-Assets) regulation imposes a key requirement on Crypto-Asset Service Providers (#CASP): the mandatory separation of client funds and crypto-assets from those of the company.

This obligation has significant accounting and regulatory implications for the #CryptoBusiness sector and aligns with broader #CryptoCompliance measures.

📌 Why is this Obligation Essential?

This rule serves two primary purposes :

✔ Protect investors and clients in case of a PSCA’s insolvency.

✔ Prevent fund mismanagement and ensure greater transparency in the #DigitalAssets ecosystem.

As #CryptoRegulation becomes a strategic priority, complying with these obligations is critical for the sustainability of PSCAs and to build investor trust.

🚨 What Are the Risks for Non-Compliance?

Failing to comply with this requirement exposes PSCAs to severe penalties, including :

✅ Administrative fines and sanctions 💰

✅ Suspension or revocation of the license 🛑

✅ Prohibition from holding executive roles 🚫

📜 Regulatory Basis: Article 111 of the #MiCA Regulation

These measures ensure compliance and mitigate systemic risks related to the mismanagement of client-held #CryptoAssets.

📜 What Does MiCA Say Exactly?

The #MiCA regulation (EU 2023/1114) mandates fund segregation in Articles 70 and 75 :

🔹 Article 70: Safeguarding Client Crypto-Assets and Funds

✔ PSCAs must implement protective measures to safeguard client property rights, especially in cases of insolvency.

✔ Client crypto-assets cannot be used for the PSCA’s own purposes.

✔ Client funds must be deposited in a credit institution or central bank and kept separate from the PSCA’s business accounts.

🔹 Article 75: Custody and Administration of Crypto-Assets on Behalf of Clients

✔ PSCAs must establish clear agreements with clients, detailing their custody and administration responsibilities over #DigitalAssets.

✔ A client-specific ledger must be maintained for full transparency.

✔ Client crypto-assets must be legally and functionally segregated from the PSCA’s own holdings.

🔎 How to Ensure Optimal Accounting Compliance?

To align with #MiCA regulations, a PSCA must implement a rigorous financial structure, including :

👉 Separate accounts for corporate funds and client funds.

👉 A structured accounting framework that meets regulatory requirements.

👉 Strict internal controls to track all financial flows.

Adopting these best practices not only prevents sanctions but also enhances financial management and boosts the company’s credibility among clients and investors.

🚀 Is This an Opportunity for PSCAs ?

Although this new rule is demanding, it represents a major opportunity for #PSCA :

✅ Stand out from competitors by promoting transparent and compliant financial management.

✅ Reassure investors and clients by ensuring the security of their #CryptoAssets.

✅ Avoid sanctions and ensure long-term success by fully adhering to #CryptoRegulation.

PSCAs that anticipate and comply with these obligations will gain a competitive edge in the evolving #CryptoMarkets and #Web3Finance ecosystem.

📢 If you are planning to apply for PSCA licensing, you must incorporate this fund segregation requirement into your application. We cover this topic in a separate article !

📩 Conclusion

The segregation of client funds and corporate assets is now a non-negotiable regulatory requirement for all #PSCA.

Failure to comply can result in severe penalties, but at the same time, this requirement presents an opportunity to structure and secure operations in a rapidly evolving #CryptoBusiness landscape.

💡 Need assistance with MiCA compliance? Contact us to learn more!

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