MiCA in Czech Republic

The signing of the Digitalization of the Financial Market Act by the President of the Czech Republic Petr Pavel on February 6, 2025 marked the beginning of a new stage in the development of Czech regulation of cryptoassets. With the entry into force of this regulation from February 15, 2025, the Czech National Bank has been given clearly defined powers in the area of supervision of the digital asset market. This move is aimed at fully implementing the provisions of the European Markets in Cryptoassets Regulation (MiCA), which comes into force throughout the European Union from the end of December 2024.

Until now, Czech National Bank did not have sufficient institutional competence to process applications and notifications under MiCA. The new law bridges this gap and gives the bank the functions of the primary authority responsible for licensing crypto service providers (CASPs), overseeing compliance by token issuers, and authorizing and registering white papers for cryptoassets other than asset-backed tokens and electronic money tokens.

One of the key activities of Czech National Bank will be the acceptance of white paper applications containing a description of the crypto project, its objectives and structure. Such a document becomes a key source of information for investors and a transparency tool. In addition, Czech National Bank will review applications for authorization of asset-backed token issuers, including non-banking entities and credit institutions, and oversee the public offering and circulation of electronic money tokens. Additionally, the bank will become the supervisory authority for CASPs, both new licensees and those companies previously authorized to operate in the cryptocurrency sector under a national trading license.

A transitional regime has been established for companies already operating in the market. Those entities that were operating before December 30, 2024 are entitled to continue operating until a new license is obtained, provided that they comply with the provisions of the law and apply for licensing by July 31, 2025. This transition period ensures legal continuity and minimizes operational risks, allowing the regulator to smoothly integrate incumbent players into the new regulatory environment. Nevertheless, the final deadline for legal operations under the previous licenses (obtained from the Czech Trade Office) is set for July 1, 2026.

• Companies active before December 30, 2024 can continue operating temporarily.
• They must apply for a MiCA license by July 31, 2025.
• Final cut-off date for old licenses: July 1, 2026.
• Licenses previously issued by the Czech Trade Office will expire by this date.

Against the backdrop of legislative changes, Czech National Bank is also considering more ambitious steps regarding digital assets. In particular, it has initiated a study of the possibility of including bitcoin in the structure of the Czech central bank’s foreign exchange reserves, which exceed CZK 3.4 trillion. The idea caused a heated discussion in the expert community. The critics’ arguments concern the high volatility of cryptocurrency, lack of guarantees and regulatory uncertainty. At the same time, supporters of such a move point to its potential as an asset diversification tool and a sign of an innovative approach in the management of state reserves.

• Critics: Argue high volatility, no guarantees, and regulatory uncertainty.
• Supporters: View it as diversification and a sign of innovation.
• Foreign reserves: Currently exceed CZK 3.4 trillion.

The final decision on the use of bitcoin in reserves should be based on a comprehensive analysis of the risks and benefits, including legal, technological and macroeconomic factors. If the outcome is positive, the Czech Republic could become one of the first EU states whose financial policy officially recognizes the crypto-asset as a reserve instrument.

Thus, the entry into force of the Financial Market Digitalization Act and the implementation of MiCA provisions mark the beginning of a new legal model in which cryptocurrencies cease to be an unregulated area and come under institutional control. This creates the conditions for increased transparency, investor confidence and a common regulatory framework compatible with pan-European standards.

Nevertheless, questions remain about the central bank’s ability to provide the speed and technological flexibility needed to effectively regulate innovation. The potential delays associated with adapting procedures and controls may run counter to the basic characteristics of cryptocurrencies as a means of rapid exchange and decentralized store of value. The successful implementation of Czech National Bank’s new functions will depend on its ability to balance investor protection and the reliability of the financial system with the needs of the rapidly evolving crypto market.

The legislative process to create a modern regulatory framework for digital finance in the Czech Republic is entering its final phase. In the third reading, the Chamber of Deputies approved the draft Digital Finance Act aimed at harmonizing national legislation with European Union regulations governing the digital financial infrastructure. The document has been sent to the Senate for approval and, if approved, will form the basis for the enforcement of key regulations such as MiCA (Cryptoasset Markets Regulation) and DORA (Digital Operational Resilience Regulation).

The focus is on establishing legal mechanisms to ensure systemic investor protection, strengthen financial sector resilience and institutionalize the supervision of crypto-assets. According to the draft, the Czech National Bank will be given expanded powers to license cryptocurrency service providers, monitor their compliance with regulatory requirements and crack down on violations. An important part of the draft law is also the transformation of the approach to the classification of administrative offenses related to activities in the field of virtual assets.

The document also adapts national legislation to MiCA requirements, including the rules governing the issuance and circulation of so-called “asset-backed tokens” and “electronic money tokens”. Asset reservation and disclosure obligations are introduced for issuers of such instruments, bringing them closer to the standards applicable to traditional payment institutions. These provisions create conditions for the effective implementation of MiCA, which comes into force from the end of 2024.

Czech Finance Minister Zbynek Stanyura emphasizes the importance of the new law: “Despite the growing popularity of cryptoassets among the population, until now there has been a lack of specialized regulation in this area. The new law will close the gap in consumer protection, increase transparency and ensure a level playing field for all participants in the digital market.” His position reflects the strategic priority of the Czech authorities: to ensure the sustainable development of the cryptocurrency market without compromising the stability of the financial system.

An important aspect of the new legislation is the inclusion of tax changes related to transactions with cryptoassets. The approved text provides for the introduction of the so-called “time test” and “value test” – mechanisms allowing individuals to exempt certain income from cryptocurrency transactions from taxation.

Crypto Taxation Updates

• Time Test: Income exempt if crypto held ≥ 3 years.
• Value Test: Total annual transaction value ≤ CZK 100,000.
• Aligns crypto tax treatment with securities.

Specifically, the income tax exemption will apply if the condition of a three-year holding period of the crypto asset is met and the total value of transactions in a calendar year does not exceed CZK 100,000. This measure brings the taxation of cryptocurrencies closer to the regime already applied to securities transactions.

In parallel, the bill implements the provisions of the DORA regulation aimed at creating a unified system for regulating the digital operational stability of financial institutions.

Digital Operational Resilience (DORA)

• Unified regulation of IT risk across EU financial sector.
• Protects critical digital infrastructure.
• Eliminates fragmented national approaches.

The adoption of DORA eliminates fragmented approaches to IT risk management in the EU financial sector and ensures holistic protection of critical digital infrastructure.

The Digital Finance Act is scheduled to enter into force on December 30, 2024 and January 17, 2025 – depending on when the relevant MiCA and DORA regulations come into force. These dates are aligned with the timetable for the implementation of European legislation and aim at a smooth transition to the new regulatory system without legal and administrative disruptions.

Key Dates

The adoption of this law opens a new era for participants in the cryptocurrency and fintech sector in the Czech Republic. Regulated rules of the game, institutional oversight and tax predictability create the basis for the development of a transparent and sustainable digital economy. However, the issue of timely preparation for the new requirements remains relevant for all market participants – both in terms of compliance with license conditions, tax planning and legal compliance.

On December 30, 2024, Regulation (EU) 2023/1114 on Markets in Cryptoassets (MiCA) came into force in the European Union, initiating a single pan-European regulation of the cryptocurrency industry. This regulation removes the fragmentation of previous national regimes and introduces harmonized standards for all market participants, from token issuers to cryptoasset service providers (CASPs).

MiCA was inspired by the structure of the Markets in Financial Instruments Directive (MiFID II) and provides similar principles for licensing, operational transparency and risk management. It establishes information publication requirements for cryptoasset offerings, public offerings and listings on trading platforms, and introduces comprehensive rules on internal controls, corporate governance and investor protection.

In order to implement MiCA into the Czech national legal system, the Act on the Digitalization of the Financial Market was adopted, which entered into force on February 15, 2025. This act formally grants the Czech National Bank (ČNB) the authority to license and supervise CASPs, including enforcement and sanctions for violations. The act eliminates the legal vacuum that existed prior to its enactment and ensures the regulatory integration of MiCA provisions into Czech jurisdiction.

Companies operating cryptoasset businesses in the Czech Republic before December 30, 2024 are required to apply for a CASP license no later than July 31, 2025. Provided the application is submitted within the deadline, continued operations are allowed until July 1, 2026 or until the regulator’s decision is received.

CASP License Classes under MiCA

Additionally, there are separate licenses for issuers of Asset-Referenced Tokens (Asset-Referenced Tokens) and e-money tokens (e-money tokens). These entities must comply with more stringent financial and organizational requirements, including asset reservation and reporting similar to the standards applicable to e-money institutions.

To obtain a CASP license, the following documentation package must be submitted:

Required Documents for CASP Licensing

• Founding documents & ownership structure
• Business model & 3-year strategy
• Financial model & capital sources
• AML/CFT policies & KYC
• ICT risk & operational procedures
• Asset protection confirmation
• White Paper & MiCA compliance

Candidates for licensing are also subject to a good character review. Directors and qualified shareholders must have an appropriate professional reputation, no criminal record, transparent sources of funding and sufficient managerial competence. One of the board members must be an EU tax resident.

Special attention is paid to information security and sustainability of the ICT infrastructure in accordance with the DORA Regulation. Implementation of internal controls, backups, incident response plans, and segregation of company assets and client funds is required. Violation of these requirements can result in sanctions up to and including license revocation.

Penalties for Non-Compliance

• Fines up to €15 million or 15% of turnover
• Operational suspension or access bans
• Inclusion on high-risk entities list

Failure to comply with MiCA regulations carries serious consequences: fines of up to €15 million or 15% of annual turnover, suspension of operations, prohibition of access to financial infrastructure and inclusion in the list of high-risk entities.

Regulated United Europe provides comprehensive support in preparation and support of CASP licensing in the Czech Republic: from legal diagnostics and documentation preparation to interaction with the regulator and post-licensing support. Our expertise ensures full compliance with MiCA requirements and sustainable business development in the new EU regulatory landscape.

MiCA regulations in Czech Republic

With the EU’s Markets in Cryptoassets Regulation (MiCA) coming into force on December 30, 2024, Czech cryptocurrency companies must prepare for a full transition to the new rules by mid-2025. The MiCA regime introduced by MiCA transforms the national regulatory model by replacing the current VASP license (Virtual Asset Service Provider) with the pan-European CASP license (Crypto-Asset Service Provider). This means that from 2025, cryptocurrency companies in the Czech Republic will be subject to the same legal framework applicable in all EU countries, which is designed to increase transparency, reliability and the level of consumer protection in the digital asset market.

MiCA aims to eliminate the legal diversity that has existed in the EU until now, when each jurisdiction independently determined the framework for regulating cryptoassets. In such circumstances, entrepreneurs faced legal uncertainty and risks associated with incompatible rules in different countries. The new regulation creates a unified legal regime for cryptoasset-related service providers, establishing clear market admission criteria, capital requirements, internal control systems and IT infrastructure.

MiCA covers companies that issue or place tokens, exchange transactions, manage customer wallets, transmit orders to buy or sell tokens, and provide investment advice on digital assets. Companies that already perform such activities in the Czech Republic are required to apply for a CASP license by July 31, 2025. Pending the completion of the application, they are allowed to continue operating, but not later than July 1, 2026. New market participants must comply with MiCA requirements from the first day of their operations.

The CASP license is divided into three main tiers depending on the complexity and scope of the services provided:

• Class 1 covers basic services, including the transmission of client orders, the provision of advice and the placement of tokens. These companies have a minimum authorized capital of €50,000.
• Class 2 provides for the storage of client assets and the exchange of cryptocurrencies for fiat funds. Here, the capital bar is raised to 125,000 euros.
• Class 3 applies to operators of trading platforms and exchanges. These entities are required to provide a capital of at least 150,000 euros, as well as implement enhanced internal controls and risk management measures.

Additionally, companies issuing stablecoins and other tokens equivalent to electronic money are subject to stricter rules similar to the Electronic Money Institute (EMI) license and must ensure a capital of at least €350,000.

To obtain a CASP license, a CASP must undergo a comprehensive assessment process that includes:

• Confirmation of the experience and impeccable reputation of the managers and key shareholders;
• Preparation of a three-year financial plan and a description of the business model;
• Submission of proof of minimum capital;
• Evidence of an effective anti-money laundering (AML) policy, including appointment of a compliance officer (MLRO), description of customer identification (KYC), risk assessment and internal monitoring processes;
• Description of IT systems architecture, cybersecurity measures, disaster recovery plans and protection of digital asset access keys.

It must also be proven that client assets are securely segregated and kept separate from company funds. Compliance with DORA (Digital Operational Resilience Act) standards in terms of cyber threat resilience is implied.

Failure to comply with MiCA will result in administrative and financial penalties. Companies operating without a license will be suspended from the EU market and can be fined up to €15 million or 15% of their annual turnover. Regulators also have the right to suspend operations, block a platform or revoke a license in case of violations of its terms and conditions. Particularly strict measures are envisaged for non-compliance with AML and information security rules.

In the context of the transition to pan-European regulation, reliable legal support is of key importance. Regulated United Europe, a law firm specializing in supporting crypto businesses in the EU, provides a full range of services to prepare companies in the Czech Republic for CASP licensing, including legal due diligence, development of internal documentation, application support and communication with the regulator. This ensures not only the timely receipt of the license, but also the long-term legal sustainability of the business in the new regulatory environment.

MiCA license in Czech republic

From 2025, Regulation (EU) 2023/1114 on Markets in Cryptoassets (MiCA) comes into force in the Czech Republic, which significantly changes the regulatory environment for cryptocurrency companies. The new legal regime establishes mandatory requirements for all participants in the digital asset sector, including mandatory licensing, AML/CFT compliance, operational sustainability and compliance with digital security standards. As part of a pan-European approach, the Czech Republic is fully integrating the provisions of MiCA, offering a single access to the EU market for companies complying with these requirements.

MiCA is being introduced in response to the need to address the fragmentation of cryptoasset legislation in EU states. Prior to its adoption, companies faced heterogeneous requirements across jurisdictions. This created legal uncertainty and allowed for unfair activities, including the launch of unregulated exchanges and the placement of questionable tokens. The new regulation establishes harmonized operational requirements, ensuring a stable and transparent legal environment.

The regulation applies to all legal entities and individuals engaged in professional activities with cryptoassets, including exchanges, token issuers, custodial services, trading platform operators and investment advice providers. Companies registered before December 30, 2024 are required to apply for a cryptoasset service provider (CASP) license by July 31, 2025. If the filing deadline is met, continued operations are permitted until July 1, 2026.

MiCA provides for three main classes of CASP licenses depending on the nature of the services:

• Class 1: basic operations without custody of assets – execution of orders, advice, transmission of instructions. Minimum authorized capital: €50,000.
• Class 2: inclusion of custodial and exchange services. Capital requirements: EUR 125,000.
• Class 3: management of trading platforms. Authorized capital: from 150,000 euros.

There are separate licenses for issuers of Asset-Referenced Tokens and e-money tokens. They are subject to higher capital requirements – up to €350,000 or a percentage of issuance volume – as well as mandatory compliance with regulatory standards similar to the EMI Directive.

Companies applying for a license are required to submit a full set of documents including:

• corporate documentation;
• a description of the business model and a three-year development strategy;
• a financial model and sources of capital;
• comprehensive AML/CFT and KYC policies;
• internal regulations on risk management and IT security;
• measures to ensure the protection of client funds and access keys;
• White Paper and disclosure if token issuance is carried out.

Regulators in the Czech Republic, including the Czech National Bank (CNB), assess the business reputation of directors and shareholders, their compliance with the criteria of trustworthiness, experience and lack of criminal record. At least one director is required to be an EU tax resident. Politically exposed persons are subject to separate control.

Serious attention is paid to information and operational resilience, including compliance with the requirements of the DORA (Digital Operational Resilience Act) Regulation. Companies must document the existence of IT systems architecture, incident response plans, backup mechanisms and protection against external attacks. Separately, the obligation to separate client and corporate assets is regulated.

Non-compliance with MiCA requirements entails administrative liability: fines of up to 15 million euros or up to 15% of annual turnover, suspension of activities, license revocation and inclusion in the register of high-risk entities. Regulators have the right to impose daily fines until the violations are remedied.

Regulated United Europe provides full support in the process of preparation for MiCA licensing in the Czech Republic: from legal due diligence and documentation development to support of the application and interaction with the CNB. Comprehensive legal due diligence ensures not only successful licensing, but also the sustainable operation of crypto-businesses in accordance with pan-European regulatory standards.

Regulation of cryptocurrencies in the Czech Republic

As of May 2025, the regulation of cryptocurrencies in the Czech Republic is undergoing fundamental changes. New legal mechanisms under Regulation (EU) 2023/1114 on Markets in Cryptoassets (MiCA), as well as Act No. 31/2025 Coll. on the Digitalization of the Financial Market, which came into force, form a unified regulatory structure aimed at increasing transparency, reducing risks and protecting investors’ interests.

MiCA eliminates previous regulatory fragmentation by harmonizing requirements for cryptocurrency activities at the level of the entire European Union. Inspired by the logic of MiFID II, the regulation introduces uniform standards for the public offering of cryptoassets, the operation of trading platforms and the mandatory licensing of cryptoasset service providers (CASPs). These provisions are reflected in Czech law through the Financial Market Digitalization Act, which grants the Czech National Bank (ČNB) powers of supervision, licensing, enforcement and sanctioning of violations.

Under the new requirements, all legal entities and individuals providing cryptoasset services in the Czech Republic are required to obtain a CASP license. Companies operating before December 30, 2024 must apply by July 31, 2025. If the deadline is met, continued operations are allowed until July 1, 2026 or until the regulator makes a ruling.

The new regime provides for three classes of CASP licenses:

• Class 1: execution of orders, investment advice and transfer of orders without custody of assets. Minimum authorized capital: €50,000.
• Class 2: adding the functions of storing crypto-assets and conducting exchange transactions. Capital: €125,000.
• Class 3: managing trading platforms. Requires capital from 150,000 euros.

Separate licenses are available for issuers of asset-backed tokens or e-money with asset reservation and regular reporting obligations. The minimum capital can be as high as €350,000 or set depending on the size of the issue.

The license procedure requires the following documents:

• registration documents and ownership structure;
• a description of the business model and a 3-year development plan;
• confirmation of funding sources;
• AML/CFT, KYC and internal control policies;
• risk management and information security management system;
• measures to protect and segregate client assets;
• White Paper (if required) and relevant notifications under MiCA.

Managers and shareholders are screened to ensure they meet the criteria of goodwill, transparency of capital sources and no criminal record. One of the directors must be a tax resident of an EU country. In case of politically exposed persons in the ownership structure, enhanced supervision is applied.

Special attention is paid to the fulfillment of the provisions of the DORA Regulation. Companies must demonstrate the stability of ICT infrastructure, availability of incident response plans, implementation of backup and monitoring systems. Separate reporting of client and company funds is mandatory.

There are strict sanctions for non-compliance with MiCA: fines of up to €15 million or 15% of turnover, temporary restriction or revocation of license, exclusion from access to financial infrastructure and inclusion in the register of entities with high regulatory risk.

The new regulatory framework is not only a strengthening of control, but also an opportunity for legitimate companies to gain access to the European market under uniform conditions. MiCA creates the conditions for the professionalization of the industry, ensuring long-term sustainability and consumer and investor confidence.

Regulated United Europe provides comprehensive support for cryptocurrency projects in the Czech Republic: legal due diligence, documentation development, CASP license application support and liaison with the Czech National Bank. We ensure full regulatory compliance and promote sustainable business development in line with the new EU legislative path.

Tax regulation of Stablecoins in the Czech Republic in 2025

Stablecoins are a special category of digital assets whose value relies on a peg to an external underlying asset – typically a fiat currency. This model makes them less susceptible to price volatility and distinguishes them from classic cryptocurrencies, which function primarily as speculative instruments. However, the Czech legal field continues to consider stablecoins within the framework of general provisions on cryptocurrencies, without distinguishing them as an independent legal category. This provision leads to a number of legal and fiscal contradictions, especially in the context of the updated tax legislation that came into force in February 2025.

In the current legal architecture of the Czech Republic, stablecoins are not recognized as currency, electronic money or investment instruments. The Czech National Bank and the Ministry of Finance have consistently confirmed that these assets do not have the characteristics of traditional securities or other financial instruments. Legal doctrine considers stablecoins as sui generis intangible movable objects – objects that do not fall under the existing regulatory framework but are nevertheless in legal circulation. This legal uncertainty persists in the tax context as well.

Until 2025, individuals’ income from transactions in cryptoassets, including stablecoins, was subject to full taxation regardless of the duration of ownership and transaction amounts. According to Section 10 of Act No. 586/1992 Coll. on Income Tax, cryptocurrencies were treated as other property, and therefore, any income from their realization – be it exchange for fiat, barter or purchase of goods – was treated as taxable income. For the purposes of determining the tax base, the market value of the asset at the time of its disposal was used, and the obligation to fix the value and the moment of the transaction fell on the taxpayer himself.

The amendment to the Income Tax Act of February 15, 2025 introduced an important novelty by allowing individuals to benefit from tax exemption in two cases: if the minimum holding period of the crypto asset is met (more than three years) and if the total income from cryptocurrency transactions did not exceed CZK 100,000 during the tax period. However, electronic money tokens – i.e., stablecoins denominated in fiat currency – were explicitly excluded from this regime, similar to the future MiCA regulation.

Thus, owners of stablecoins, unlike users of other types of cryptoassets, cannot expect tax benefits even if they hold the asset for a long period of time. Every exchange, sale or even conversion of such a token into another cryptocurrency continues to be categorized as taxable events with a corresponding capital gains tax liability.

The legal and fiscal uncertainty is compounded by the lack of an official classification or list of tokens falling under the concept of e-money in the national context. Decentralized stablecoins such as DAI, which technically have no issuer and are not backed by centralized reserves, nevertheless perform a similar function, giving rise to controversy regarding their inclusion in the tax regime. It is possible that the tax administration’s position on such assets will change depending on practice or clarifications after the final implementation of MiCA regulations.

In this regard, the question of the legal qualification of a particular token becomes more relevant: what criteria should a taxpayer take into account to understand its fiscal status? Currently, there is no single mechanism for verifying the status of a token as electronic money. There is neither a public register nor methodological guidelines that would allow to unambiguously determine the applicable tax regime.

The practical consequence of this situation is a significant increase in tax risks in transactions with stablecoins. Since even intermediate transactions involving them may be recognized as taxable, careful recording of all transactions and timely consultation with professional tax advisors are necessary. In addition, the risk of retrospective recharacterization of an asset after MiCA comes into force remains very significant, undermining the principles of legal predictability and tax stability.

Despite the 2025 reform’s focus on providing a more transparent and fair tax regime for private investors, the situation of stablecoins shows how difficult it is to apply standard taxation tools to innovative digital assets. In the absence of a clear legislative definition and supporting methodology, the burden of determining the fiscal status of an asset is shifted to the taxpayer, which contradicts the basic principles of legal certainty.

Until the Czech legislator or the Financial Administration develops official clarifications and classification criteria for stablecoins, any actions with such assets require special prudence and detailed analysis. Legal and tax practice, as the 2025 example shows, is still in its infancy – and therefore requires cryptocurrency market participants to have a high degree of legal awareness and willingness to adapt to the rapidly changing regulatory environment.

Documents required for CASP companies to obtain a MiCA license in the Czech Republic

To meet the requirements set out in the Cryptoasset Markets Regulation (MiCA) and ESMA Guidelines, applicants seeking a CASP license must provide a comprehensive set of documents and policies. These ensure that the applicant adheres to the operational, legal, financial and security standards required to offer cryptoasset services.

The main documents required to apply for a CASP license are as follows

1. Proof of legal status
   Documents such as Articles of Association or extract from the register of legal entities.
2. Document proving the existence of web pages, e-mail address, phone numbers and contact address – declaration
3. Authorization of the representative
   Proof that a representative is authorized to act on behalf of the applicant. Extract from the commercial register

For all members of the governing body of the cryptocurrency services applicant, a certificate of no criminal convictions or sentences under applicable trade, bankruptcy or financial services legislation or in relation to money laundering, terrorist financing, fraud or professional liability;

1. Proof of payment
   Proof of payment of the state license application fee.
2. Information about managers
   Forms detailing the applicant’s management team.
3. Shareholder Information
   Forms with information about individuals or organizations that own significant shares in the company. For all shareholders and members, both direct and indirect, who have a qualifying interest in the cryptoasset services applicant, a criminal record extract that does not contain details of any convictions or penalties imposed under applicable trade, insolvency or financial services legislation or in relation to money laundering and terrorist financing, fraud or professional liability.
4. Shareholder structure
   A diagram showing the ownership structure of the company.
5. Business plan
   A detailed description of the company’s planned activities. What type of activity, where it will be carried out
6. Financial compliance
   Documents demonstrating the company’s financial strength and compliance with regulatory standards, including guarantees under Article 67 of MiCA
7. Internal processes and controls

A description of the company’s management and internal control systems. A description of the applicant’s internal controls, policies and procedures for providing cryptocurrency services to identify, assess and manage risks, including money laundering and terrorist financing risks, and a business continuity plan;

1. Evidence that the members of the applicant‘s governing body for cryptoasset services are of sufficiently good standing and have the appropriate knowledge, skills and experience to manage the provider; the fact that the members of the applicant’s governing body for cryptocurrency services collectively have the appropriate knowledge, skills and experience to manage the cryptocurrency service provider and that such persons are required to devote sufficient time to the performance of their duties; and the fact that the members of the applicant’s governing body for cryptocurrency services collectively have the appropriate knowledge, skills and experience to manage the cryptocurrency service provider.
2. Anti-money laundering measures
   Description of procedures to prevent money laundering and terrorist financing.
3. Technology and security
   Information on IT systems, security measures and business continuity planning. Technical documentation on ICT systems and security measures and their description in plain language;
4. Protection of client funds
   Procedures for separating client funds and crypto-assets from the company’s own funds.
5. Grievance handling
   Procedures for receiving and resolving customer complaints.
6. Security clearance
   Confirmation that investors meet national security requirements.
7. Specific documents
   These documents relate to specific areas of CASP’s business and are required if CASP intends to provide the specified services:

• Crypto Asset Storage and Administration. If the cryptoasset services applicant intends to store and manage cryptoassets on behalf of clients, a description of the policies for such storage and management;
• Management of trading platforms. If the cryptoasset services authorization applicant intends to operate a cryptoasset trading platform, a description of the policies of that trading platform and the process and system for detecting market abuse;
• Pricing and trading policies. If the cryptoasset services applicant intends to exchange cryptoassets for cash or other cryptoassets, a description of the trading policy, which must be non-discriminatory and must govern customer relationships, and a description of the pricing methodology for the cryptoassets that the cryptoasset services applicant proposes to exchange for cash or other cryptoassets;
• Execution of customer transactions. Where the cryptoasset services applicant intends to execute cryptoasset instructions on behalf of clients, a description of the principles of such execution;
• Distribution of cryptoassets. Where an applicant for a cryptoasset services authorization intends to provide cryptoasset advice or manage a portfolio of cryptoassets, evidence must be provided that the individuals providing cryptoasset advice on behalf of the cryptoasset services authorization applicant or managing portfolios on behalf of the cryptoasset services authorization applicant have the necessary knowledge to
• Transferring cryptoassets for clients. If the cryptoasset services authorization applicant intends to provide cryptoasset transfer services on behalf of clients, information on how these transfer services will be performed;
• Training and competence of the service providers.
• A description of the procedure for segregating cryptoassets and customer funds;
• The type of cryptoassets to which the cryptoasset related service relates.

Additional documents

In addition to the core documents, the following standard and specific policies are also required to ensure compliance with operational, legal, and security requirements:

Standard Policies

• Terms and Conditions
• privacy policy
• Cookie Policy

Special policies

• Risk Management Policy
• Business Continuity Management Policy
• Records Retention Policy
• Information Security Policy (Data Privacy Policy)
• Fraud Prevention Policy
• Market Abuse Policy
• Policy on transfer of operational functions to other persons

Taxation of cryptocurrency in the Czech Republic in 2025

As of 2025, the tax treatment of cryptocurrency transactions in the Czech Republic enters a new phase of regulation. The adopted changes, effective as of February 15, 2025, will significantly affect the taxation of individuals selling digital assets, in particular Bitcoin, Ethereum and other cryptocurrencies, within the framework of tax reporting for the calendar year 2024.

The changes are particularly relevant against the backdrop of the historic rise in the value of bitcoin, which surpassed the $100,000 mark for the first time in 2024. This circumstance has led to significant capital gains for private investors, which in turn has necessitated the correct reflection of income in tax returns. From now on, income from cryptocurrency transactions must be declared in accordance with the updated requirements and tax rates, including an increased rate of 23% for persons with annual income exceeding CZK 1.582 million (instead of CZK 1.93 million applied a year earlier).

A significant innovation was the mechanism of the so-called “time and value test” implemented as part of the amendments to Act No. 586/1992 Coll. on Income Tax. According to the new procedure, income from the sale of cryptocurrency can be exempted from taxation if two criteria are met:

1. The cryptocurrency has been owned by the taxpayer for at least three years;
2. The aggregate income from transactions with virtual assets during the tax period does not exceed CZK 100,000.

Although these provisions come into force in 2025, they do not apply to the 2024 tax return. Thus, when preparing returns for the previous tax period, individuals should apply the previous rules, without taking into account the exemption for the period of ownership or the amount of income.

The tax base for determining income tax is the positive difference between the sale price of cryptocurrency and its purchase price. This gain is subject to taxation at the rate of 15% or 23% – depending on the total amount of annual income of the taxpayer. Moreover, not only transactions involving the exchange of digital assets for fiat money, but also transactions involving the exchange of one cryptocurrency for another, as well as payments for goods and services using cryptocurrencies are subject to taxation.

Particular caution should be exercised with regard to transactions conducted via payment cards, such as cards from the Crypto.com platform, which allow payment in fiat currency by converting cryptocurrencies loaded on the card. Such transactions, according to the current legal interpretation, are also recognized as taxable events, and the corresponding income is to be reported in the “Other Income” section of the tax return.

It is important to note that cryptocurrencies do not provide complete anonymity as many investors believe. Despite the lack of personal data in the blockchain, users are identified through KYC procedures on centralized exchanges. The Financial Administration of the Czech Republic has the right to request information on the movement of assets in the accounts of individuals, including foreign operators. Thanks to international tax exchange agreements, this data can be used for tax assignment and cross-border audits.

An important aspect is the method of calculating the tax base. Both FIFO (first-in, first-out) and weighted average cost methods can be used. The application of these approaches affects the amount of taxable income. For example:

• If you buy 0.1 BTC for 10,000 CZK and then sell it for 20,000 CZK, the FIFO profit would be 10,000 CZK.
• When calculating the average cost of two purchase transactions – at 10,000 CZK and 15,000 CZK – the average cost would be 12,500 CZK and the profit would be 7,500 CZK.

From the point of view of tax optimization, it is recommended to realize loss positions before the end of the calendar year and then enter the asset at the beginning of the new tax period. However, it should be taken into account that in the Czech Republic, losses from cryptocurrency transactions cannot be offset against other income – they are only counted to the extent of profits from transactions with similar assets in the same year.

For legal entities, the rules are even stricter. Companies are required to keep accounting records in local currency, recording every receipt and movement of crypto-assets. Income from the sale of cryptocurrency received as a result of the sale of goods or rendering of services is recognized in the amount of the value of the realized product. In case of further use of cryptocurrency (e.g. for employee benefits or acquisition of assets), the exchange rate on the date of transaction is applied and the difference is recognized as a financial result.

In view of these changes, taxpayers – both individuals and legal entities – are strongly advised to prepare in advance for filing a tax return for 2024. For convenience, a wide range of tools are available, including online forms in PDF and XML formats developed in cooperation with tax consultants. They allow you to correctly calculate tax liabilities and avoid penalties for late filing.

With increasing scrutiny of transactions involving virtual assets, all participants of the crypto market in the Czech Republic should approach their tax obligations with the utmost legal awareness and accuracy. The updated legislation creates not only new opportunities for tax optimization, but also new risks for those who neglect the requirements.

Why you should start cooperation with Regulated United Europe for obtaining MiCA license in Czech Republic

With the entry into force of Regulation (EU) 2023/1114 on Markets in Cryptoassets (MiCA) in the Czech Republic from December 30, 2024, the need for reliable legal support has become more important than ever for companies dealing with digital assets. The complexity of requirements and the increasing stringency of national supervision require businesses to be not only strategically prepared, but also to have in-depth legal expertise. Regulated United Europe offers professional support for the process of obtaining a CASP (Crypto Asset Service Provider) license in the Czech Republic, combining knowledge of European legislation with practical experience in the Czech market.

Our team specializes exclusively in the legal regulation of cryptocurrencies and virtual assets under European Union law. We take a deep dive into MiCA requirements as well as the Czech Digital Finance Act regulating license issuance, internal controls, consumer protection and asset reservation requirements. Through constant monitoring of Czech National Bank practices and legal developments, Regulated United Europe provides clients with relevant and realistic go-to-market strategies.

Cooperation with our team covers the entire licensing process: from legal assessment of the business model for compliance with MiCA criteria and preparation of a full package of internal documents (including AML, KYC, risk management, client asset protection policies) to registration of a legal entity in the Czech Republic, support in opening a bank account and interaction with the regulator. We act as an intermediary between your business and government agencies, reducing the risks of license denial and ensuring compliance with all technical and procedural requirements.

MiCA regulations require cryptocurrency companies to be fully transparent and adhere to good governance rules. This means that each applicant will be subject to strict requirements in terms of governance structure, capital, compliance and customer transaction monitoring. Regulated United Europe provides out-of-the-box solutions that meet these requirements and tailor them to the specifics of a particular project. This is particularly relevant for companies working with tokenization, custodial services, staking, DeFi platforms or implementing NFT solutions.

It is important to note that CASP licensing in the Czech Republic is exclusively through the Czech National Bank. Having local expertise and the ability to negotiate with the regulator in the Czech language gives Regulated United Europe a competitive advantage. We have a qualified team of lawyers and tax consultants in the Czech Republic, providing prompt communication, preparation of documents in accordance with the internal standards of the CNB and full support of the client until obtaining a license and in the framework of post-licensing control.

An additional advantage is the provision of tax advice. Taking into account the changes in legislation from 2025, including the introduction of the time and value test for exemption from tax on cryptocurrency income, our experts explain the rules of accounting, tax optimization, compliance with reporting requirements and correct reflection of transactions in the balance sheet.

Regulated United Europe offers transparent pricing and a step-by-step model of cooperation, allowing to customize legal support for specific business goals. Successfully realized projects in the Czech Republic, Lithuania, Estonia and other jurisdictions confirm the reliability and professionalism of our team. We strive not just to issue a license, but to build a long-term cooperation with the client, ensuring sustainable development and full compliance with the European Union legislation.

Choosing Regulated United Europe as a legal partner for MiCA licensing in the Czech Republic is a decision in favor of reliability, accuracy, reputation and practical efficiency. We understand European regulation not in theory, but in action – and we are ready to help your project reach the next level within a legal and regulated environment.