MiCA — the EU Markets in Crypto-Assets Regulation — came into full application for most crypto-asset service providers in December 2024, following a phased rollout. For buyers of European real estate who want to fund transactions with cryptocurrency, MiCA has changed the question from "is there a regulatory framework?" to "is the entity I'm working with authorised under it?"
This article explains what MiCA actually covers, how it affects custody providers operating in EU markets like Portugal and Cyprus, what "MiCA-aligned" means in practice, and why the difference between operating under MiCA and operating without authorisation matters for a buyer.
What MiCA Is and What It Covers
MiCA is an EU regulation — not a directive — which means it applies directly in all 27 member states without requiring transposition into national law. It was published in the Official Journal of the EU in June 2023 under Regulation (EU) 2023/1114 and supersedes the patchwork of national frameworks that preceded it in countries like Portugal and Germany.
MiCA governs crypto-asset service providers (CASPs) — the entities that provide custody, exchange, transfer, and advisory services involving crypto assets to clients. It does not govern the crypto assets themselves (with separate treatment for asset-referenced tokens and e-money tokens), and it does not regulate the underlying blockchains.
The services subject to MiCA authorisation include:
- Custody and administration of crypto assets on behalf of clients
- Operation of a trading platform for crypto assets
- Exchange of crypto assets for fiat currency
- Transfer of crypto assets on behalf of clients
- Reception and transmission of orders for crypto assets
For a real estate buyer, the relevant category is the first: custody and administration. Any entity holding your BTC, ETH, or USDT during the period between transfer and deed completion is performing a custody function. Under MiCA, that function requires authorisation as a CASP from the competent authority in the member state where the entity is established.
How MiCA Authorisation Works
A CASP seeking authorisation under MiCA must apply to its national competent authority — in Portugal, that is the Comissão do Mercado de Valores Mobiliários (CMVM); in Cyprus, the Cyprus Securities and Exchange Commission (CySEC). The competent authority has 40 working days to assess the application.
To receive authorisation, a CASP must demonstrate:
- Adequate capital: MiCA sets minimum own funds requirements depending on the class of CASP, with custody providers subject to specific capital adequacy thresholds.
- Fit and proper governance: Management body members must pass fitness and propriety assessments. Significant shareholders are also assessed.
- Operational resilience: Systems and security protocols meeting EBA and ESMA guidance on ICT risk for financial services.
- AML/CFT compliance: MiCA-authorised CASPs are also subject to the EU's anti-money laundering framework, including the Travel Rule obligations under the Transfer of Funds Regulation.
- Client asset segregation: Custody providers must hold client assets separately from the firm's own assets and cannot use client assets for the firm's own purposes.
Once authorised, a CASP can passport its services across EU member states. This means a CASP authorised in Portugal can legally provide custody services to clients in Cyprus, or vice versa, without separate national registrations.
MiCA authorisation is not a registration or a notification. It is a substantive licence with ongoing supervision, capital requirements, and the possibility of revocation. The distinction matters.
What "MiCA-Aligned" Means in Practice
You may see escrow or custody providers describe themselves as "MiCA-aligned" or "MiCA-compliant." This language requires scrutiny.
MiCA includes transitional provisions that allow entities which were registered under pre-existing national frameworks to continue operating for up to 18 months after MiCA's application date in their jurisdiction, while pursuing full authorisation. This grandfathering period ended for most EU markets in mid-2026.
After the transitional period, there are two categories:
- Authorised CASPs: Entities that have received authorisation from a national competent authority under MiCA. They are listed on the ESMA register of authorised CASPs.
- Unauthorised entities: Entities providing custody or other CASP services without authorisation. This is a breach of MiCA. In Portugal, it can result in fines of up to €5 million or 3% of annual turnover, whichever is higher.
"MiCA-aligned" in the context of a custody provider should mean the entity holds a current CASP authorisation or is within the transitional period with an active application in process. Verify this against the ESMA register before transferring funds.
How MiCA Changes Buyer Protection
Before MiCA, a buyer in Portugal or Cyprus using a crypto escrow provider was relying on that provider's own representations about how it held funds, what would happen in a dispute, and whether their crypto was protected if the provider failed. There was no uniform regulatory floor.
Under MiCA, authorised CASPs must:
- Hold client crypto assets in segregated accounts that are clearly distinguishable from the firm's own assets
- Maintain a written custody policy describing how assets are held and what safeguards are in place
- Compensate clients for losses caused by malfunctions, security failures, or breaches of duty
- Disclose all fees, conflicts of interest, and the identity of any sub-custodians used
- Maintain a complaint procedure with defined response timelines
- Report any material change in their activities to the competent authority
For a buyer transferring seven or eight figures in crypto into escrow for a real estate transaction, these protections are not abstract. They define what recourse you have if the escrow provider fails before the deed transfers. Without MiCA authorisation, that recourse is contractual and depends entirely on the provider's solvency.
MiCA and the Travel Rule
MiCA operates alongside the EU's Transfer of Funds Regulation (TFR), which implements the FATF Travel Rule for crypto transfers in the EU. Under the TFR as updated in 2023, CASPs must transmit identifying information about the originator and beneficiary of every crypto transfer, regardless of amount — the EU removed the previous threshold that existed under earlier FATF guidance.
For a real estate buyer, this means that when you transfer crypto to a Brik escrow account, the originating exchange or wallet provider must send identifying information along with the transaction data. If the buyer's originating provider cannot comply with Travel Rule obligations — either because it is not a regulated entity or because it operates outside a compliant jurisdiction — the transfer may be rejected by the receiving CASP.
This is not a barrier to doing business. It is a compliance checkpoint. Buyers who hold crypto through licensed exchanges and have documented their source of funds will clear it without friction. Buyers who hold crypto through non-compliant channels will need to restructure before the transaction can proceed.
Why Portugal and Cyprus for EU Crypto Buyers
Within the EU, Portugal and Cyprus represent two distinct value propositions for crypto-native real estate buyers, both operating under the same MiCA framework.
Portugal offers legal certainty, EU residency pathways, and a property market that has stabilised after the sharp appreciation of 2020 to 2023. Lisbon remains a premium market; Porto and the Algarve offer more accessible entry points. Portugal was one of the earlier EU markets to see significant crypto-funded property transactions, and the legal and notarial infrastructure for processing these deals is established. Read the Portugal guide for specific details.
Cyprus is an EU member state with a distinct tax regime — a 12.5% corporate tax rate, no inheritance tax, and specific personal income tax exemptions for new residents. The Limassol market in particular attracts buyers from Eastern Europe and the Middle East who hold significant crypto wealth and are looking for EU-domiciled assets. See the Cyprus versus Portugal comparison for a side-by-side analysis.
In both markets, a buyer working with a MiCA-authorised CASP benefits from the same regulatory framework, the same buyer protections, and the same Travel Rule compliance infrastructure. The competent authorities differ — CMVM in Portugal, CySEC in Cyprus — but the standards are uniform. That uniformity is what makes MiCA useful in practice for cross-border transactions.
If you are considering a property purchase in Portugal or Cyprus and want to understand how Brik's MiCA-aligned operations structure the transaction, get in touch directly. Most deals begin with a short call to scope the structure and confirm jurisdiction-specific requirements.
Frequently Asked Questions
What does MiCA cover?
MiCA — the EU Markets in Crypto-Assets Regulation — governs crypto-asset service providers (CASPs) operating in EU member states. It covers custody and administration of crypto assets on behalf of clients, operation of trading platforms, exchange services, and transfer services. It applies directly to any regulated entity providing these services to EU clients.
Does MiCA apply to real estate transactions?
MiCA does not regulate real estate directly. It governs the crypto-asset service provider involved in the transaction — specifically, the entity holding crypto in custody during the escrow period. Any CASP operating in the EU must be authorised under MiCA or hold a transitional authorisation. An escrow provider that holds crypto without CASP authorisation is operating outside the MiCA framework.
What buyer protections does MiCA create?
MiCA requires CASPs to segregate client assets, maintain adequate capital, implement AML/CFT programmes, disclose fees and conflicts of interest, and establish complaint procedures. For a crypto real estate buyer, the most material protection is asset segregation — your crypto cannot be commingled with the custodian's own assets or used for the custodian's purposes while held in escrow.