Top Mistakes to Avoid When Applying for a CASP License in the EU
Top Mistakes to Avoid When Applying for a CASP License in the EU
Blog Article
As the European Union’s copyright regulation framework—MiCA (Markets in copyright-Assets)—takes effect, businesses providing copyright-related services must obtain a CASP license to operate legally. While the licensing process presents major opportunities, it also comes with strict standards, rigorous compliance checks, and documentation requirements.
Unfortunately, many applicants make critical errors that delay approvals—or worse, lead to rejection. In this article, we’ll outline the top mistakes to avoid when applying for a CASP license in the EU, so your business can secure its license and hit the ground running.
1. Underestimating the Complexity of the Application
Many startups wrongly assume that the CASP license is a simple registration form. In reality, it is a detailed regulatory process involving multiple stakeholders, including legal, financial, and compliance professionals.
You must submit:
Business plans
AML/KYC policies
Financial forecasts
Governance structures
Risk management systems
Treat the process with the same level of seriousness as applying for a banking or investment firm license.
2. Choosing the Wrong Jurisdiction
The EU allows CASPs to be licensed in any member state—but not all jurisdictions are equally efficient. Some have well-established copyright licensing procedures, while others are still adjusting to MiCA’s new rules.
Common mistakes:
Registering in a country without sufficient legal support or English-speaking regulators
Picking a country with longer approval timelines
Underestimating capital or tax requirements
Always research jurisdictions thoroughly. Countries like Lithuania, Estonia, Cyprus, and Malta are known for copyright-friendly policies and faster processing.
3. Incomplete or Poor-Quality Documentation
One of the most frequent reasons for delays or rejections is submitting incomplete or low-quality documents. Regulators expect professionally drafted internal policies that match your business model—not generic templates.
Typical documentation errors:
Vague or copy-pasted AML policies
Business plans with unrealistic forecasts
Missing financial statements or legal declarations
Non-compliant governance structures
Invest in experienced legal and compliance advisors who know MiCA requirements.
4. Failing to Appoint Qualified Personnel
MiCA requires certain roles to be filled by experienced, “fit and proper” professionals—especially for the positions of:
Compliance Officer
MLRO (Money Laundering Reporting Officer)
Executive Director
Risk Manager
Mistakes include:
Appointing people with no regulatory or copyright experience
Listing part-time or remote-only staff
Using foreign staff who don't meet residency requirements
Your leadership team must be based in the licensing country and demonstrate relevant expertise. Regulators will assess their CVs, conduct background checks, and may request interviews.
5. Insufficient Capital and Resources
CASPs must meet capital requirements to demonstrate they can operate sustainably and cover potential losses or risks. Each service type has a different threshold—ranging from €50,000 to €150,000.
Common financial mistakes:
Submitting weak or unrealistic financial projections
Failing to show proof of funding in a valid EU account
Using short-term loans as capital, which regulators may reject
Make sure your financials reflect not just your startup phase, but also sustainable long-term operations.
6. Weak IT and Cybersecurity Systems
copyright services must prioritize user data, asset custody, and platform integrity. Regulators will evaluate your cybersecurity protocols, encryption methods, and internal systems.
Errors that raise red flags:
No clear plan for securing wallets or user funds
Lack of two-factor authentication or encryption protocols
No documented incident response or data breach policy
Include detailed IT architecture diagrams, infrastructure security overviews, and system audits in your application.
7. Non-Compliance With AML and KYC Standards
Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance is a cornerstone of MiCA. Weak AML policies are a guaranteed reason for rejection.
Common pitfalls:
Not specifying how customer identity is verified
Vague descriptions of suspicious transaction monitoring
Lack of ongoing due diligence procedures
No sanctions or PEP (Politically Exposed Persons) screening process
Be sure your AML program is customized to your business’s risk profile, jurisdiction, and customer base.
8. Rushing the Application Process
In the race to become first-to-market, some copyright businesses rush through the CASP application, hoping to fix issues later. This often results in:
Multiple rounds of corrections
Regulator frustration
Project delays or reputation damage
Take your time to compile complete, professional, and accurate documentation. A strong first submission increases the chance of fast approval.
9. Failing to Prepare for Ongoing Compliance
Getting the CASP license is only the beginning. You must continue to:
Submit regular compliance reports
Update policies in response to new risks or regulatory changes
Undergo inspections or audits
Maintain clear records and internal controls
Failure to plan for this can lead to fines or license suspension. Set up compliance systems and reporting structures from day one.
10. Ignoring Local Business and Tax Rules
While MiCA provides unified copyright regulation, each country has unique local laws regarding business operations, labor rules, tax filing, and corporate governance.
Overlooking local compliance leads to:
Tax penalties
Employment disputes
Regulatory scrutiny outside MiCA scope
Work with local consultants or legal advisors in your licensing country to ensure full legal and financial alignment.
Final Thoughts
Applying for a CASP license is a strategic move that positions your copyright business for long-term success in the EU. But it’s also a complex process that demands precision, preparation, and professionalism.
Avoiding these 10 common mistakes can save you time, money, and legal risk, helping your business achieve approval and compliance faster. With the right strategy, your CASP license can unlock massive potential across the European copyright ecosystem.
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