The Markets in Crypto-Assets Regulation (MiCA) introduces a harmonized and strictly regulated framework for crypto assets across the European Union. For financial institutions, MiCA does not represent a parallel regulatory regime, but an extension of existing prudential, AML/CFT, and operational expectations into the crypto asset space.
As crypto increasingly becomes part of client wealth and bank service offerings, MiCA provides regulatory clarity – while at the same time raising the bar for compliance, transparency, and ongoing oversight.
MiCA as a Harmonized Framework for Financial Institutions
MiCA establishes a unified regulatory framework for crypto assets across the EU, with the objective of ensuring investor protection, market integrity, and financial stability. For financial institutions, this means operating in a more standardized and predictable regulatory environment, but also under stricter and more explicit compliance obligations when engaging with crypto assets.
Importantly, MiCA is designed to integrate crypto into the existing regulatory perimeter rather than treating it as an entirely new domain.
Licensing and Cross-Border Operations
One of the key implications of MiCA for financial institutions relates to licensing and operational scope.
Financial institutions that wish to offer crypto-asset services – such as custody, trading, or advisory services – can often rely on their existing financial licenses. Rather than applying for a full crypto-asset service provider (CASP) authorization, financial institutions may notify their national competent authority (NCA) of their intention to provide such services.
Once notified, this framework allows financial institutions to benefit from a regulatory “passport,” enabling them to operate across the entire EU under a single authorization. While this lowers barriers to entry from a licensing perspective, it places increased emphasis on consistent compliance execution across jurisdictions.
MiCA in the Context of AML/CFT and the Transfer of Funds Regulation
MiCA does not stand alone. It builds on the EU’s broader AML/CFT framework and the Transfer of Funds Regulation (TFR), reinforcing and extending existing obligations into the crypto asset context.
For financial institutions, this has several concrete implications.
Key Compliance Implications for Financial Institutions
In this article we focus on the key implications – depending on a bank’s specific crypto business model, MiCA may also introduce additional prudential, supervisory, and cross-border considerations beyond the compliance topics discussed below.
Due Diligence (KYC)
Financial institutions are required to conduct rigorous KYC checks on all customers. This includes identity verification, risk assessment, and understanding source of funds.
In the context of crypto assets, this means going beyond traditional documentation. Financial institutions need to understand wallet activity and transaction flows prior to onboarding a client with crypto-related wealth. This assessment does not end at onboarding: periodic reviews are required to ensure that no new high-risk activities emerge over time.
The challenge lies in establishing sufficient transparency while maintaining proportionality and scalability.
Transaction Monitoring (KYT)
MiCA reinforces the requirement for continuous transaction monitoring. Financial institutions must implement systems capable of monitoring crypto transactions on an ongoing – including real-time – basis.
The objective is to identify exposure to high-risk, sanctioned, or suspicious counterparties in a timely manner and to support appropriate escalation and action where required.
Record Keeping and Reporting
MiCA further strengthens expectations around record keeping and reporting. Financial institutions must maintain detailed records of transactions, customer information, and compliance actions.
Where suspicious activity is identified, reporting obligations apply. From a supervisory perspective, the ability to reconstruct decisions and demonstrate consistent application of internal policies is critical.
Travel Rule Requirements
Under the Transfer of Funds Regulation, financial institutions must collect and exchange originator and beneficiary information for all crypto-asset transfers between CASPs, regardless of the transaction amount.
This requirement applies uniformly and reinforces the need for robust processes, accurate data capture, and clear audit trails across crypto-asset transfer activity.
How WalletCheck Supports MiCA-Aligned Compliance
WalletCheck is designed to support financial institutions in meeting these requirements in a practical, scalable, and compliance-first manner. The focus is not on investigations or asset recovery, but on enabling defensible onboarding and monitoring decisions within existing bank workflows.
Supporting KYC and Ongoing Reviews
WalletCheck enables multi-hop tracing of wallet activity and flow of funds across blockchains. This provides financial institutions with a clear picture of relevant wallet behavior prior to onboarding.
Risk is summarized through a clear green / amber / red traffic-light assessment to support consistent compliance decisions. In addition, automated periodic reviews and notifications allow financial institutions to monitor changes in risk over time and manage client relationships proactively.
Enabling KYT and Real-Time Monitoring
For transaction monitoring, WalletCheck supports real-time identification of interactions with high-risk, sanctioned, or suspicious counterparties.
This allows compliance teams to receive timely signals, assess relevance in line with internal risk appetite, and take appropriate action without overwhelming workflows or defaulting to investigation-grade processes.
Audit-Ready Record Keeping and Reporting
WalletCheck provides audit-ready PDF reports that consolidate relevant transaction data, risk assessments, and analytical context in a single output.
Clear guidance on suggested actions for high-risk counterparties – such as filing a suspicious activity report – supports consistent escalation and documentation, helping financial institutions meet supervisory expectations around traceability and accountability.
Looking Ahead
MiCA provides financial institutions with regulatory clarity and a harmonized framework for engaging with crypto assets. At the same time, it raises expectations around transparency, monitoring, and documentation.
Meeting these requirements does not require financial institutions to reinvent their compliance frameworks. It requires extending existing AML/CFT principles into the crypto asset domain in a way that is proportionate, scalable, and defensible.
WalletCheck is built to support exactly this transition.
If you would like to learn more about our methodology or how WalletCheck can support MiCA-aligned crypto compliance, please reach out to:
