MiCA Regulation Leaves Staking Providers in Regulatory Gray Area

The European Union's MiCA regulation has been in effect since July 1, 2023, but its impact on staking services is still unclear. Unlike exchanges and other crypto-asset services, staking is not explicitly mentioned in the regulation.

This lack of recognition doesn't mean that staking is unregulated, however. The licensing requirement under MiCA attaches to what the provider actually does, rather than the label on the product. In most cases, staking offerings aimed at retail investors involve at least one of the listed activities, such as custody and administration of crypto-assets.

The key factor in determining whether a staking provider needs a license is who controls the coins. If the provider holds the private keys, it's considered custody and administration, making them subject to authorisation as a CASP (crypto-asset service provider). This includes centralised exchanges, broker apps, and most providers that advertise rewards as an annual percentage.