As part of our ongoing expert series on global crypto legal regimes, we analyze and evaluate different regulatory approaches for digital assets. This article explores the transition to the EU’s new MiCA regulation in Sweden, where the new rules represent a new era of regulation and a foundation for building trust in digital assets.
2024 context
Prior to the implementation of MiCA in December 2024, there was no dedicated legislation for digital assets in Sweden. In 2018, the Swedish government passed the Currency Exchange and Other Financial Activities Act, which incorporated the EU’s 2018 Fifth Anti-money Laundering Directive requirements. Cryptocurrencies are defined as a means of payment under the Act, meaning that digital asset firms exchanging crypto for Swedish krona, foreign currencies, e-money, or other cryptos were subject to AML requirements. From 2020, this has included the requirement to register with the Swedish Financial Supervisory Authority or FSA (Finansinspektionen, or FI in Swedish).
Over several years, the FSA has been extremely cautious about crypto, while at the same time, the Swedish Central Bank (Riksbank) has proven open to experimenting with digital currencies, allocating 30 million krona in 2020 to making Sweden an innovation hub. This also extends to investigations into the possibilities of a digital krona, although as of 2024, no decision had been confirmed.
Upon the full implementation of MiCA in December 2024, the relevant laws that previously covered cryptocurrencies in Sweden will be reduced in scope, to accommodate the new EU regulation.
Overview of MiCA procedure and timeline
On 22nd May 2024, the Swedish government passed the necessary legislation to appoint the FSA as the competent authority for handling MiCA applications.
In implementing MiCA, the FSA has not issued any specific guidance that deviates from the generic provisions issued by the EU; instead, it defers to the guidelines issued by the EU and ESMA. It has stipulated a nine-month transition period during which the FSA will grandfather the CASP registrations that were granted before MiCA came into force. Therefore, Swedish CASPs must obtain their MiCA license by latest 30th September 2025.
Notification procedure
Under MiCA rules, not all entities are required to obtain a full CASP license if they already provide certain regulated financial services in the EU. Article 60 exempts regulated credit institutions, securities depositories, investment firms, and others already licensed or regulated under established EU financial regulations from the requirement to obtain a CASP license from their domestic regulator. Instead, MiCA provides a simplified notification procedure that allows them to extend existing operations to digital assets.
According to the MiCA rules, qualifying entities must notify the regulator at least 40 days in advance of commencing CASP operations.
Licensing for new CASPs
Any firm that doesn’t qualify for an Article 60 exemption will be required to obtain a full CASP license from the FSA. In the absence of any specific application form, CASPs are advised to use the generic data collection templates provided by ESMA in its Final Report on Draft Technical Standards for the implementation of MiCA.
The minimum timeline stipulated by ESMA is 70 days, which breaks down into the following timeline:
- Within 5 working days –FSA must provide written confirmation of receipt of the application
- Within 25 working days, FSA confirms to the applicant whether the application is complete. At this point, the application period may be prolonged if the FSA determines that more information is required.
- Within a further 40 working days – FSA must have assessed the application. The FSA may request additional information within the first 20 days of this period. If so, the assessment period is subsequently paused, awaiting the applicant’s response.
The FSA applies fees for processing licensing applications, which can vary according to the types of CASP services (or combinations thereof) being offered.
Transitional arrangements for existing CASPs
The FSA doesn’t allow for any modified or fast-track application process for CASPs that were already registered prior to MiCA, so the full application process and fees are required. However, existing Swedish CASPs registered with the FSA prior to 30th December 2024 can benefit from a transitional period that lasts until 30th September 2025, during which time they can continue to operate under their previous FSA registration.
Even so, obtaining the MiCA license as soon as possible is worthwhile due to its portability benefits. The transitional arrangements will only allow a CASP to continue serving Swedish customers, while a MiCA license allows firms to provide services throughout the entire EU bloc of 27 countries.
Market opportunity
While crypto adoption in Sweden is currently relatively low compared to European counterparts, with only 9 percent having ventured into digital assets, there are some encouraging trends. According to a 2024 survey jointly conducted by K33 and EY, adoption is highest among younger demographics, showing that there’s an opportunity to appeal to a new generation of investors in the most populous Nordic nation.
Any historical lack of appetite could be attributed to many years of financial safety messaging centered on crypto fraud on the part of the FSA. Therefore, regulated trading provides an opportunity to appeal to Swedish investors who may have been deterred by a previous lack of safeguards.
Launching a MiCA-compliant CASP offering with Wyden
Wyden Infinity covers the entire end-to-end trade lifecycle of digital assets across all pre-trade, trade, and post-trade use cases. It enables sell-side firms to build and maintain retail and institutional client offerings as well as internal prop-trading needs via a single platform, making Wyden Infinity the ideal choice for banks and brokers when building and scaling their fully MiCA-compliant digital asset businesses.
A key advantage of the Wyden platform is that it offers true best execution through market-wide connectivity to over 55 trading venues and a smart order routing system that carries out price comparisons and order splitting to achieve the optimal execution terms. Transparency is built into the system via real-time pre- and post-trade data, and Wyden’s standalone accounting system offers a fully auditable transaction trail.
Integration with custody partners, such as Copper, Metaco, and Fireblocks, also means Wyden maintains an auditable record of transaction flows between custody and trading with automated liquidity management solutions that ensure an uninterrupted trading experience. Core banking integrations ensure smooth reconciliation and support the assimilation of a new digital asset offering into established workflows.
Contact us today for an initial discussion about implementing a compliant digital asset offering in your organization.
Please note that the above article does not constitute legal advice.