Guide
CASP capital requirements: Annex IV, fixed overheads and insurance
Updated
The headline numbers are the least interesting part. What catches firms out is the fixed-overheads test, which rises with the business, and the very specific insurance policy that can stand in its place.
The two limbs of Article 67(1)
Prudential safeguards must at all times equal at least the higher of: the permanent minimum capital in Annex IV for the type of services provided, and one quarter of the fixed overheads of the preceding year, reviewed annually. A firm that has not been trading a full year uses the projected fixed overheads for its first 12 months, as submitted with the application (Article 67(2)).
| Class | Services | Minimum |
|---|---|---|
| Class 1 | Execution of orders, placing, transfer services, reception and transmission of orders, advice, portfolio management | EUR 50,000 |
| Class 2 | Any class 1 service plus custody and administration, exchange for funds, or exchange for other crypto-assets | EUR 125,000 |
| Class 3 | Any class 2 service plus operation of a trading platform for crypto-assets | EUR 150,000 |
How fixed overheads are calculated
Article 67(3) takes total expenses after distribution of profits from the most recently audited annual financial statements, or statements validated by the national supervisor where audited ones do not exist, and subtracts four things: staff bonuses and remuneration that depend on net profit, employees', directors' and partners' shares in profits, other appropriations of profits and fully discretionary variable remuneration, and non-recurring expenses from non-ordinary activities. What is left is the fixed overhead base, and a quarter of it is the test.
The insurance alternative, and its conditions
Article 67(4) allows the safeguards to be met by own funds consisting of Common Equity Tier 1 items under Articles 26 to 30 of Regulation (EU) No 575/2013, by an insurance policy, or by a combination. The policy is not a general professional indemnity cover: Article 67(5) requires an initial term of at least one year, a cancellation notice period of at least 90 days, an insurer authorised under Union or national law, and a third-party provider, and it must be disclosed publicly on the provider's website.
- Article 67(6) sets what the policy must cover: loss of documents; misrepresentations or misleading statements; acts, errors or omissions breaching legal and regulatory obligations, the duty to act honestly, fairly and professionally, or confidentiality; failure to maintain procedures preventing conflicts of interest; losses from business disruption or system failures; where relevant to the business model, gross negligence in safeguarding clients' crypto-assets and funds; and liability to clients under Article 75(8).
- Article 75(8) is the custody liability that makes this concrete: a provider is liable to its clients for the loss of any crypto-asset or means of access as a result of an incident attributable to it.
What capital is not
None of this is a fee. Application and supervisory fees are set nationally, not by MiCA, and differ sharply between member states; capital stays on your balance sheet. Article 35 sets an entirely separate own funds regime for issuers of asset-referenced tokens: the highest of EUR 350,000, 2% of the average reserve of assets, and a quarter of fixed overheads, with the supervisor able to add up to 20%.
Because the fixed-overheads limb is reviewed annually, a provider that grows past the Annex IV floor has to keep re-testing. Build the review into the annual accounts timetable rather than treating the minimum as a one-off.