Own funds requirement

Own funds are the firm's own money, not the customer balances it looks after. MiCA sets the floor by service class in Annex IV at EUR 50,000, EUR 125,000 or EUR 150,000, and lets a provider meet the same figure with insurance instead of capital. Those sums are small, so treat the requirement as a licensing hurdle rather than a safety net for your coins.

How it works

The own funds requirement under MiCA is two numbers, and a crypto-asset service provider must hold whichever is larger. The first is the permanent minimum capital for its class in Annex IV: EUR 50,000 for a provider that only executes orders, places crypto-assets, transfers them for clients, receives and transmits orders, advises or manages portfolios; EUR 125,000 once it also takes custody, exchanges crypto-assets for funds, or swaps one crypto-asset for another; EUR 150,000 once it operates a trading platform. The second number, in Article 67(1)(b), is one quarter of the fixed overheads of the preceding year, reviewed annually.

That second leg is the one that bites at any real scale. Article 67(3) builds it from the most recently audited annual accounts: total expenses after profits are distributed, less profit-dependent bonuses, employees', directors' and partners' shares in profits, fully discretionary variable pay, and non-recurring expenses from non-ordinary activities. A firm that has not traded for a year uses the projected overheads for its first 12 months of service, as submitted with its application (Article 67(2)).

Article 67(4) leaves the form of the safeguard open. A provider can hold Common Equity Tier 1 items under Articles 26 to 30 of Regulation (EU) No 575/2013, or buy an insurance policy covering the Union territories where it operates, or combine the two. Article 67(5) sets the policy's own conditions: disclosed publicly on the provider's website, an initial term of not less than one year, a cancellation notice period of at least 90 days, and a third-party insurer authorised under Union or national law.

Where you see it

The own funds requirement has a second track in MiCA for token issuers, at far larger figures. Article 35(1) makes an issuer of an asset-referenced token hold the highest of EUR 350,000, 2 % of the average reserve of assets (end-of-day balances averaged over the preceding six months), or a quarter of the previous year's fixed overheads. Article 45(5) lifts that 2 % to 3 % once the token is significant. Two uplifts sit on top, both computed on the reserve-percentage leg in point (b) rather than on the requirement as a whole: up to 20 % more than that leg produces under Article 35(3), and 20 % to 40 % more under Article 35(5) where stress testing warrants it. Article 58(1)(b) carries the same machinery to a third case: an electronic money institution issuing a significant e-money token follows Article 35(2), (3) and (5) and Article 45(5) in place of Article 5 of Directive 2009/110/EC. Annex V lists a shortfall against Article 35(1) as a named infringement, so the figure is supervised rather than self-declared.

On this site the euro floors are printed rather than left to be inferred. A crypto-licence guide for a MiCA state states its minimum capital in the facts grid, then repeats it in a class table that sets each Annex IV figure beside the services that class covers, so an applicant matches its service list to a row rather than deriving the floor.

Own funds requirement vs Proof of reserves

An own funds requirement counts the firm's own capital; proof of reserves counts whether client balances are actually backed by assets the firm holds. They answer different questions and can disagree completely: a provider can sit comfortably above its Annex IV floor while running a shortfall against customer deposits, because the floor was never sized against the deposit book. MiCA handles the second question separately, through the segregation and safeguarding duties on client crypto-assets and funds, and neither obligation substitutes for the other.