On December 30, 2024, the MiCA regulation finally entered into force. This means that companies engaged in licensable activities under MiCA can apply to the Danish FSA for a license as a CASP(Crypto Asset Service Provider).

For the Danish FSA to process an application under MiCA, it is a condition that the applicant company has a real presence in Denmark. The main purpose of this is to ensure that the Danish FSA as supervisory authority can carry out supervision of the company.

The real presence condition is a common feature of financial regulation, but it is particularly relevant for companies dealing with crypto-assets. This is probably due to the fact that companies can offer their services online and their employees can work digitally. However, a physical presence in the Member State where the company applies for a license is necessary for the supervisory authority to carry out the aforementioned supervision.

When do you meet the "real presence" requirement?

For a company to have a real presence in Denmark, it must have an actual and substantial connection to the country.

It is a specific overall assessment when a company has an "actual and substantial connection to Denmark". The assessment is made by the Danish FSA and is based on a number of criteria.

Examples of criteria include:

• Has the company established a head office or otherwise have a significant physical presence in Denmark?
• Is the company's management based in Denmark?
• Is the company actually managed from Denmark? In this connection, it may be particularly relevant whether management meetings (such as board meetings) and general meetings are held in Denmark.
• Are a significant number of the company's employees located in Denmark? If yes, it will count positively if they are key employees.
• Does your company target the Danish market? If yes, it will count positively. However, if the company primarily caters to a market other than the Danish market, it will count negatively.

The above criteria are not exhaustive. The FSA will make an overall assessment of the company's actual connection to Denmark based on its specific business model and activities.

‍What are the consequences of non-compliance with the "actual presence" requirement?

As mentioned, actual presence in the country is a prerequisite for obtaining a license as a CASP. If the FSA assesses that the actual presence requirement is not met, the FSA has the following reaction options:

1. The FSA must assess within 25 working days whether an application is complete in accordance with Article 63(2). If it is not complete, the FSA may set a deadline for the applicant undertaking to submit the missing information.
   
   
2. The Danish FSA may reject the application in accordance with Article 63(9). Consequently, the company must resubmit an application, which will be considered a new application. The processing time will then start all over again.

 A rejection will also mean that companies using the transition from VASP registration to MiCA license(grandfathering) will have this transition period interrupted. This means that companies already performing crypto-asset services will have to cease these activities and can only resume them once a MiCA license is granted.

3. If the effective presence is not maintained after obtaining a MiCA license, the FSA may withdraw the license.

It is therefore important that companies not only focus on fulfilling the material documentation requirements, but also actively work to establish and maintain a real presence in Denmark.