MiCA Compliance

VINCTA provides comprehensive compliance automation for the EU’s Markets in Crypto-Assets Regulation (MiCA). Our MiCA Rule Engine implements 13 automated compliance rules across customer due diligence, reporting, and governance - helping crypto asset service providers (CASPs) meet regulatory requirements while maintaining operational efficiency.

What is MiCA?

MiCA (Regulation EU 2023/1114) is the European Union’s comprehensive regulatory framework for crypto-asset markets. It became effective on December 20, 2024, and applies to all crypto asset service providers operating in the EU.

The Regulatory Landscape

MiCA establishes uniform rules across all EU member states, implementing the principle of “same activity, same risk, same rules.” This means crypto services are now regulated similarly to traditional financial services, with proportionality applied based on risk and service type.

The regulation is enforced by:

• ESMA (European Securities and Markets Authority) - EU-level oversight
• BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) - German regulator
• FIU (Zentralstelle für Finanztransaktionsuntersuchungen) - German financial intelligence unit

Key Objectives

MiCA aims to:

• Establish uniform regulatory framework for crypto-asset markets
• Protect consumers and market integrity
• Prevent money laundering and terrorist financing
• Ensure operational resilience of crypto service providers

Who Must Comply?

Crypto Asset Service Providers (CASPs)

Definition: Any natural or legal person providing one or more of these services:

1. Custody - Holding crypto assets on behalf of customers
2. Trading Platforms - Operating platforms for crypto asset trading
3. Exchange Services - Converting crypto to fiat or crypto to crypto
4. Order Execution - Executing customer orders for crypto assets
5. Placement Services - Placing crypto assets with customers
6. Reception & Transmission - Receiving and transmitting customer orders
7. Advisory Services - Providing advice on crypto assets

Licensing Requirements

In Germany, CASPs must obtain a BaFin license under the KWG (Kreditwesengesetz). License types include:

• Crypto Custodian License - Minimum capital: EUR 125,000
• Crypto Trading Platform License - Minimum capital: EUR 730,000

Both require:

• Compliance officer appointment
• Internal audit function
• Business continuity plan
• Cybersecurity measures
• Governance framework

VINCTA’s MiCA Rule Engine

VINCTA implements 13 automated compliance rules across three categories, covering MiCA Articles 19-33:

Customer Due Diligence (CDD) Rules

These rules ensure proper customer identification and verification before transactions:

Reporting (RPT) Rules

These rules ensure suspicious and large transactions are properly reported:

Governance (GOV) Rules

These rules ensure proper organizational compliance and oversight:

Key Compliance Thresholds

EUR 1,000 Full CDD Threshold

Rule: MICA-CDD-002
Regulatory Article: MiCA Article 19

Transactions of EUR 1,000 or more require full Customer Due Diligence before processing. This is a critical threshold that triggers enhanced verification requirements.

What triggers it:

• Any transaction ≥ EUR 1,000 where full CDD is not complete
• Applies to both fiat and crypto transactions
• Cumulative transactions in a period may trigger threshold

What’s required:

• Complete customer identification
• Verify identity using reliable, independent source documents
• Obtain information on purpose and intended nature of business relationship
• Conduct risk assessment
• Document all verification steps

How VINCTA handles it:

• Automatically evaluates transaction amount against CDD status
• Blocks transaction if threshold exceeded without full CDD
• Alerts compliance officer for manual review
• Logs all evaluation details for audit trail

EUR 10,000 Large Transaction Reporting

Rule: MICA-RPT-004
Regulatory Article: MiCA Article 28

Transactions of EUR 10,000 or more must be reported to the FIU (Financial Intelligence Unit) within 15 calendar days.

What triggers it:

• Any transaction ≥ EUR 10,000
• Applies to both incoming and outgoing transfers
• Includes both fiat and crypto transactions

Reporting requirements:

• Customer identification
• Transaction details (amount, date, type)
• Counterparty information
• Source and destination of funds
• Supporting documentation

Timeline:

• Detection: Automatic when transaction exceeds threshold
• Reporting: Within 15 calendar days to FIU
• Documentation: Maintain records for 5 years

Self-Hosted Wallet Attestation

Rule: MICA-CDD-003
Regulatory Article: MiCA Article 19

Transfers exceeding EUR 1,000 to self-hosted (non-custodial) wallets require proof of wallet ownership.

What are self-hosted wallets:

• Wallets controlled directly by the customer
• Not held by a regulated custodian
• Examples: MetaMask, hardware wallets, personal nodes

When verification is required:

• Transfer amount > EUR 1,000
• Destination is a self-hosted wallet
• Customer has not previously verified ownership

How to verify ownership:

• Customer signs a message with the wallet private key
• Provide transaction hash showing wallet control
• Submit government ID matching wallet registration
• VINCTA validates proof and documents verification

Travel Rule Compliance

The Travel Rule (MiCA Article 26) requires information sharing for cross-border crypto transfers, similar to wire transfer requirements in traditional banking.

What is the Travel Rule?

The Travel Rule requires that when a customer initiates a transfer of crypto assets to another entity, certain information about the originator and beneficiary must be transmitted along with the transfer.

When it applies:

• Cross-border transfers (between different countries)
• Transfers between different CASPs
• Transfers exceeding EUR 1,000 (greater than EUR 1,000)
• Both incoming and outgoing transfers

Data requirements:

Originator Information:

• Full name
• Account number or wallet address
• Date of birth
• Address

Beneficiary Information:

• Full name
• Account number or wallet address
• Address (if available)

How VINCTA validates:

• Verifies originator information matches customer records
• Validates beneficiary information is complete
• Checks for sanctions or high-risk indicators
• Maintains audit trail of all transfers
• Generates alerts for missing or incomplete information

Audit Trail & Record Keeping

What VINCTA Logs

Every compliance evaluation is automatically logged to the mica_rule_evaluations table with complete details:

For each rule evaluation:

• Rule ID (e.g., “MICA-CDD-001”)
• Trigger conditions evaluated
• Conditions met (true/false for each)
• Result (pass/fail/alert/block)
• Timestamp (UTC)
• Evaluator ID (system or user)

For each action executed:

• Action type (block_transaction, request_kyc, generate_str, etc.)
• Action result (success/failure)
• Timestamp (UTC)
• Executor ID
• Supporting evidence

For each case created:

• Case ID
• Reason for creation
• Associated rules
• Timestamp (UTC)
• Assigned compliance officer

Retention Requirements

Transaction Records (GwG § 8):

• Retention Period: 5 years from transaction date
• Content: Transaction ID, amount, parties, timestamp, rules evaluated, result
• Accessibility: Must be retrievable within 5 business days

Customer Records (GwG § 8):

• Retention Period: 10 years from end of business relationship
• Content: Customer ID, CDD documentation, risk assessment, decisions
• Accessibility: Must be retrievable within 10 business days

Audit Trail (GwG § 8a):

• Retention Period: 5 years
• Content: All access to customer data, all modifications, all evaluations
• Accessibility: Must be searchable and exportable

BaFin Audit Procedures

When BaFin conducts an examination (at least every 3 years), they will request access to your audit trail and compliance records.

Export capabilities:

• Query audit trail by date range
• Filter by rule, customer, or transaction
• Export to CSV or JSON format
• Encrypted transmission via TLS 1.3

Query examples:

-- All evaluations for a specific customer
SELECT * FROM mica_rule_evaluations 
WHERE customer_id = 'cust-12345' 
AND evaluated_at >= '2025-01-01'
 
-- All STR-related evaluations
SELECT * FROM mica_rule_evaluations 
WHERE rule_id LIKE 'MICA-RPT%' 
AND evaluated_at >= '2025-01-01'
 
-- All blocked transactions
SELECT * FROM mica_rule_evaluations 
WHERE action = 'block_transaction' 
AND evaluated_at >= '2025-01-01'

Compliance reporting:

• Annual compliance report due 6 months after year-end
• Quarterly statistics due 30 days after quarter-end
• Incident reporting within 5 business days
• Remediation plans for audit findings

API Integration

VINCTA provides REST APIs for MiCA compliance automation:

Rule Evaluation API

Evaluate transactions and customers against MiCA rules in real-time.

Endpoint: POST /api/mica/evaluate

Request:

{
  "client_id": "your-org-id",
  "trigger_type": "transaction",
  "trigger_entity_type": "transaction",
  "trigger_entity_id": "tx-20260101-001",
  "data": {
    "customer_verified": true,
    "amount_eur": 1500,
    "full_cdd_complete": false,
    "customer_id": "cust-12345"
  }
}

Response:

{
  "rules_triggered": ["MICA-CDD-002"],
  "should_block": true,
  "should_alert": false,
  "should_create_case": true,
  "highest_severity": "high",
  "evaluation_id": "eval-uuid-12345",
  "timestamp": "2026-01-01T10:30:00Z"
}

Wallet Screening API

Screen crypto wallets for risk indicators and sanctions (Coming in Week 4).

Endpoint: POST /api/mica/screen-wallet

Features:

• Sanctions list screening
• Risk score calculation
• Darknet association detection
• Transaction history analysis

Travel Rule API

Validate Travel Rule transfers and verify beneficiary information (Coming in Week 4).

Endpoint: POST /api/mica/validate-travel-rule

Features:

• Originator/beneficiary verification
• Cross-border transfer validation
• Information completeness checking
• Audit trail generation

See MiCA API Reference for complete technical documentation.

Performance & Reliability

VINCTA’s MiCA Rule Engine is built for production use:

Rule Evaluation Performance:

• Average evaluation time: less than 80ms per transaction
• P99 latency: less than 200ms
• Cache hit rate: 95% (reduces latency to less than 10ms)

System Reliability:

• 100% test coverage
• Automated audit trail logging
• Zero data loss guarantee
• Production-ready deployment

Compliance Assurance:

• All 13 rules tested against regulatory requirements
• Audit trail immutability verified
• Performance benchmarked against industry standards
• Regular security audits

Next Steps

1. Review the API Reference - See MiCA API Reference for integration details

2. Contact Support - Reach out to our compliance team for:

   • BaFin permit assistance
   • Custom rule configuration
   • Integration support

3. Schedule Compliance Review - Meet with VINCTA’s compliance team to:

   • Review your current compliance procedures
   • Identify gaps and opportunities
   • Plan implementation timeline
   • Establish audit procedures

Regulatory References

EU Regulations:

• Regulation (EU) 2023/1114 - Markets in Crypto-Assets (MiCA)
• ESMA Guidelines on MiCA Implementation

German Regulations:

• Geldwäschegesetz (GwG) - German Money Laundering Act
• BaFin Guidance on Crypto Regulation
• KWG § 1(1a) - Crypto Custodian Licensing

International Standards:

• FATF Recommendations on AML/CFT
• Basel Committee Crypto Guidance

Last Updated: January 1, 2026
Status: Production Ready
Next Review: July 1, 202626