On Thursday, April 3, 2025, Merkle Science hosted a webinar called MiCA Compliance & AML Crash Course: Key Requirements for CASPs.
The event featured Merkle Science’s Policy & Regulatory Affairs Director Natalia Latka along with Director of Product Ian Lee.
The full webinar can be watched on-demand here.
During the webinar, the speakers provided compliance professionals with an in-depth overview of the Markets in Crypto-Assets regulation (MiCA)—the EU’s foundational framework for governing crypto businesses—along with anti-money laundering (AML) best practices and actionable strategies tailored for Crypto-Asset Service Providers (CASPs).
Below is a recap of the webinar’s highlights.
According to Latka, before MiCA, the EU’s crypto oversight was highly fragmented, with most countries relying on AML directives that applied only to a narrow set of providers—mainly crypto-to-fiat exchanges and custodial wallet providers—leaving gaps in coverage and creating a patchwork of rules across member states.
Some countries expanded their scope to include more services and assets, or implemented bespoke regulatory frameworks like Malta’s, resulting in varied authorization requirements for CASPs. This inconsistency made it particularly difficult for CASPs to operate cross-border, as they faced different registration or licensing obligations in each jurisdiction.
Latka shared that the goal of MiCA was not only to extend these existing regulatory frameworks:
“It was also to harmonize these regulations to make sure that CASPs can also operate more freely and easily across the entire EU - which would be obviously based on the authorization - where we would have standard requirements for all CASPs,” she said, noting that whether this is actually happening is a subject of debate.
There is a particular lack of standardization in the MiCA rollout. While rules for stablecoin issuers took effect in June 2024, MiCA’s requirements for CASPs became applicable in December 2024, with an optional transitional period allowing CASPs to continue operating under national frameworks until as late as July 1, 2026.
However, this transitional period is not mandatory—each member state can decide autonomously, contributing to ongoing regulatory fragmentation across the region.
“They can or adopt the full period, which is one of the most prevailing choices, but they can also reduce the period or they can opt out entirely,” said Latka.
CASPs must use this MiCA transitional period to align their compliance strategies, restructure operations, and secure MiCA-specific authorization. Each CASP must carefully assess where to obtain authorization based on the regulator's capacity, the number of existing applicants, and whether the timeline allows for processing before the July 2026 deadline.
Under MiCA, existing AML registrations cannot be "converted" into MiCA authorizations, and only fully MiCA-authorized CASPs are eligible for EU-wide passporting rights. This makes early application and strategic jurisdiction selection essential for firms seeking to operate across the European Union.
AML compliance remains mandatory without exception, as CASPs were already subject to the EU’s AML Directive prior to MiCA, and this obligation continues under the new framework. Likewise, market abuse provisions—targeting practices such as manipulation and insider trading—are already in force, with no transitional period granted.
In addition, the Travel Rule, established under the EU’s Transfer of Funds Regulation (TFR), became effective in December 2024. Although a brief transitional period is allowed, it is limited to resolving technical implementation challenges and does not exempt CASPs from compliance.
“You need to have alternative mechanisms in place and solutions to transmit the data securely, to receive the data, to verify the recipient and the originator of the transfer,” Latka explained.
Such challenges help explain why 42% of crypto startups in Europe anticipate increased operational costs as they work to meet MiCA’s stringent compliance requirements.
Fortunately, the right tooling can streamline MiCA compliance and even reduce costs. Merkle Science’s Compass, a wallet and transaction monitoring solution, directly addresses this challenge.
“While your sales team is having a ball selling to the entire world, compliance officers have to develop appropriate risk policies that are commensurate to different jurisdictions that you operate in, and you have to constantly update those risk rules to take into account new changes or evolution in industry,” said Lee.
Merkle Science’s Compass platform features customizable workspaces—self-contained environments tailored to specific jurisdictions—making it especially effective for organizations operating across multiple regions. Each workspace can be configured with its own rules and settings to preserve client confidentiality, prevent data overlaps, and ensure jurisdiction-specific compliance.
One of the solution’s biggest strengths is its self-service design, enabling even non-technical users to operate it with ease. “As long as you have the user's cryptocurrency wallet address, anybody can actually go online and take a look at all the transactions that that address has done, and that is a game changer when it comes to monitoring,” he said.
Users can also monitor which rules trigger most often and leverage the built-in case management system to track how alerts are assigned and resolved across teams. These rules can be built around behavior-based monitoring, a concept Merkle Science introduced to blockchain analytics that focuses on identifying suspicious activity through patterns in wallet behavior.
“Things like users making multiple high value transactions in short succession, or staggered and irregular patterns in the way that they transact,” Lee said as a way of example.
All of these features make Compass ideal for CASPs operating in the EU or crypto businesses managing compliance across multiple jurisdictions. To learn more about MiCA compliance for CASPs, the full webinar is available on-demand here. For a free demo of Compass, reach out to Merkle Science.
