Seeking Advice on P2P Trading Setup and Licensing in EU/UK

[alpakiwi]

Hi everyone,

I've been a member of this forum for many years and recently rejoined the Mentor Group --I love OffshoreCorpTalk and hope it continues for many years. Recently, I've been exploring the P2P trading space on platforms like Binance and OKX, and despite its age, it still seems to be a profitable business model if you have sufficient capital to move around.

After researching the leading players in Europe and the UK, I've noticed that most P2P providers are based in the Czech Republic, Lithuania, or Poland. After speaking with various service providers, most seem to recommend Poland due to the availability of digital signatures and other advantages. By contrast, the Czech Republic lacks digital signature support, and Lithuania recently introduced a €125k deposit requirement to be held in escrow, which complicates things further.

I've also been offered the opportunity to purchase existing VASP licenses in Poland for €10-12k, rather than setting up my own. If anyone has experience with this route, I'd appreciate any feedback or advice.

Overall, I'm reaching out to see if anyone has firsthand experience with licensing for P2P trading and whether Poland truly is the best option in Europe right now. I understand there are limitations, especially with any EU VASP license being "grey line" for doing p2p in the UK, so I want to ensure I'm making an informed decision and not being misled by service providers. I've read some older posts on this topic (including one from last year), but given the rapid pace of regulatory change””especially with MiCA””I'm hoping to get more up-to-date insights.

Lastly, I'm aware that hiring a local director will most likely be required for proper tax residency / substance, and I've already identified some service providers who offer banking and related services.

Thanks in advance for any advice or updates you can provide!

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[Martin Everson]

Have you planned for things like local MLRO and CO in your jurisdiction of choice? I would never buy a VASP as there can be unseen liabilities legal wise that may not be visible at time of sale. VASP licenses are soon dead in EU.

EU company holding a VASP licenses must re-apply for a MICA CASP I believe with a transition period in effect. CASP's have higher share capital requirements and more stringent requirements.

If your going EU route then wait until 1st Jan 2025 when MICA CASP applications open.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[alpakiwi]

Thank you very much, @Martin Everson, for the valuable advice. I wasn't aware of the upcoming MICA CASP applications, and based on what you're telling me, it seems unwise to either apply for or purchase an existing VASP license, especially with the transition to CASP and potential unseen liabilities.

I'm prepared to hire an MLRO and CO since we're planning to move around $300K per day. I'll also start researching the CASP application process to ensure I can have everything ready for submission when applications open on January 1st, 2025.

Would you apply to a Poland VASP license, for example, and then transition to CASP? Or you would rather wait?

If you have any further recommendations regarding service providers or jurisdictions that could help me plan ahead and prepare the necessary paperwork, I'd greatly appreciate your insight. Thanks again for your guidance!

 

[Martin Everson]

nurredon said:
Would you apply to a Poland VASP license, for example, and then transition to CASP? Or you would rather wait?
Click to expand...

https://www.mondaq.com/fin-tech/1505034/how-to-obtain-a-casp-license-under-mica-a-step-by-step-guide
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Entities new to cryptocurrency activities must apply for a CASP license before starting operations. Existing VASPs can continue under their current license until December 31, 2025, as outlined in the draft Polish Crypto-Assets Act.

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Poland has given its transition deadline of old VASP's to convert to CASP's of Dec 31 2025. If old VASP structure meets new requirements outlined above and your desperate to start then go ahead now. However I would wait. But read link above.

I would personal go non-EU setup if you have customers already, not planning on soliciting EU clients and don't need access to Fiat.

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What is Reverse Solicitation under MiCA?​

If a client in the EU initiates the provision of a crypto service or activity from a third-country CASP on their own exclusive initiative, the CASP does not need to obtain a license to operate within the EU.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[alpakiwi]

Thanks a lot. The majority of my clients come from P2P exchange platforms, and while some are recurring, most are new and tend to come and go. My concern is whether simply posting available trading amounts on these platforms would be considered solicitation under MiCA, which could potentially require me to obtain an EU license. Do you have any clarity on how this might be interpreted? Otherwise I could consider to just be able to go with a non EU license

 

[Martin Everson]

nurredon said:
Do you have any clarity on how this might be interpreted?
Click to expand...

I guide you to post I made on reverse solicitation in EU in 2022 below.

https://www.offshorecorptalk.com/threads/uk-emis-working-with-eu-customers.38548/post-227430

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Reverse solicitation is defined in article 42 of MiFID II and article 46(5) of MiFIR. Its key components are that the third country firm:

• can evidence that the investment service is provided at the exclusive initiative of the EEA client (whether such client is a retail client or professional client);
• provides only categories of products and services requested by the EEA client; and
• does not solicit, promote or advertise, any new investment products or services (in any way) to the EEA client.

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nurredon said:
My concern is whether simply posting available trading amounts on these platforms would be considered solicitation under MiCA, which could potentially require me to obtain an EU license.
Click to expand...

If you post trading amounts labelled for EU clients then it could be interpreted as such if not then no.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[alpakiwi]

It seems like I'll definitely need an EU license, then. I'm currently talking to different providers and considering getting a Polish VASP license, but I'm also thinking about how challenging the transition to MiCA CASP might be. Alternatively, I could start preparing the paperwork now and apply on January 1st, though I understand the timeline could stretch to at least 4-6 months.