The necessity of MiCAR licensing for Trade Republic explained
In a significant move for the European cryptocurrency market, Trade Republic has obtained a MiCAR license, the regulatory framework for digital assets in the European Union (EU). This license empowers the neobroker to legally offer a wide range of cryptocurrency-related services across the continent.
With the MiCAR license, Trade Republic can now:
- Facilitate the exchange, sale, and purchase of cryptocurrencies for both retail and institutional customers within the EU.
- Offer custody services to securely hold crypto-assets for clients.
- Launch or manage initial coin offerings (ICOs) or other token issuance projects, attracting investments through compliant proprietary tokens.
- Benefit from passporting rights, enabling seamless operation across multiple EU member states without needing separate licenses in each jurisdiction.
This move represents a significant step towards harmonized and transparent regulatory compliance, enhancing user trust and security in crypto services offered by Trade Republic. The company's ability to operate under a unified regulatory framework could potentially attract more customers and strengthen its market position.
Trade Republic's MiCAR license also opens up opportunities for innovative crypto financial products. For instance, the company might enable its customers to exchange cryptocurrencies among themselves and transfer them to private wallets, though this feature is not currently available.
The acquisition of the MiCAR license aligns with Trade Republic's self-perception as a "full bank," as it expands its service offerings beyond traditional stocks and ETFs. However, it's important to note that not all of Trade Republic's eight million customers may be interested in trading cryptocurrencies.
Compared to other crypto brokers like Bitpanda, Trade Republic charges a flat foreign exchange fee of one euro for cryptocurrency trading, which is considered cheap compared to Bitpanda's 0.99 percent premium for Bitcoin trading.
Joining the ranks of at least 25 providers who have already obtained a MiCAR license, including Bitpanda, Coinbase, and Kraken, Trade Republic is well-positioned to capitalise on the growing European cryptocurrency market. The specific timeline for the implementation of these new offerings by Trade Republic is not yet provided.
[1] European Commission. (2020). Markets in Crypto-Assets (MiCA) Regulation. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12522-Markets-in-Crypto-Assets-Regulation-MiCA
[3] European Commission. (2020). Markets in Crypto-Assets (MiCA) Regulation: Q&A. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12522-Markets-in-Crypto-Assets-Regulation-MiCA/questions-and-answers
[4] European Commission. (2020). Markets in Crypto-Assets (MiCA) Regulation: Frequently Asked Questions. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12522-Markets-in-Crypto-Assets-Regulation-MiCA/frequently-asked-questions
- Trade Republic's acquisition of the MiCAR license marks a significant advancement in the fintech sector, as the company can now offer a variety of crypto-related finance services using technology, such as facilitating the exchange, sale, and purchase of cryptocurrencies, providing custody services, and managing initial coin offerings.
- By benefiting from passporting rights and offering competitive foreign exchange fees, Trade Republic's entry into the European cryptocurrency market through the MiCAR license presents an opportunity to strengthen its business position and potentially attract more customers, thereby asserting its status as a key fintech player.
