On-shore VASP in Slovenia

Act on the Prevention of Money Laundering and Terrorist Financing (ZPPML-1):

Competent Authority: The Financial Administration of the Republic of Slovenia (FURS) (Finančna uprava Republike Slovenije) is the primary supervisory authority for AML/CTF compliance, including the registration and supervision of VASPs.

Current Regime (ZPPML-1): Registration. Slovenia currently requires VASPs to register with FURS before they can operate. This is a registration for AML/CTF purposes, focusing on preventing illicit financial activities, rather than a full operational license that would typically cover aspects like prudential requirements, consumer protection, or market integrity comprehensively.

Future Regime (MiCA): Licensing. The EU's Markets in Crypto-Assets (MiCA) Regulation (Regulation (EU) 2023/1114) will introduce a comprehensive, harmonized licensing framework for crypto-asset service providers (CASPs) across all EU member states. MiCA will come into full effect for most crypto-assets by December 30, 2024 (stablecoin rules apply from June 30, 2024). Once MiCA is fully implemented, it will largely supersede the national AML-driven registration requirements for the activities it covers, introducing a full licensing regime with passporting rights across the EU.

Requirement: Registration with FURS under ZPPML-1.

If processing fiat payments for crypto transactions (e.g., enabling users to deposit/withdraw EUR to/from an exchange account):

This could require a Payment Institution (PI) license or Electronic Money Institution (EMI) license from the Bank of Slovenia (Banka Slovenije). This is separate from VASP registration and is generally a more robust licensing process.

Future under MiCA: Will require a CASP license from a competent authority (which Slovenia will designate, likely Bank of Slovenia or ATVP) for operating an exchange platform.

Future under MiCA: Activities like "execution of orders for crypto-assets" or "transfer services for crypto-assets" would require a CASP license.

VASP Registration: Entities providing services of safeguarding private cryptographic keys on behalf of clients, or holding, storing, and transferring virtual currencies, are classified as "virtual asset service providers" (VASPs) under ZPPDFT-2.

Obligation to Register: VASPs must register with the Office for Money Laundering Prevention (UPPD). This is a registration requirement, not a full prudential licensing regime akin to banks or investment firms, but it entails strict AML/CFT compliance obligations.

Requirements for Registration:

Implementation of robust internal AML/CFT policies, procedures, and controls.

Risk assessment frameworks (customer, product, geographical risks).

Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) measures.

Record-keeping of transactions and customer data.

Reporting of suspicious transactions to UPPD.

Appointment of an AML officer.

Training for relevant employees.

Fit and proper assessment for management and beneficial owners (though not as extensive as for licensed financial institutions).

Currently (Pre-MiCA): ZPPDFT-2 primarily focuses on AML/CFT compliance, ensuring the identification of asset ownership and preventing illicit finance. It does not explicitly mandate insolvency-remote segregation of client crypto assets from the custodian's own assets in the same way traditional financial regulations (e.g., MiFID II for investment firms, CRD for banks) do.

Currently (Pre-MiCA): There are no specific statutory requirements under ZPPDFT-2 for VASPs (including custodians) to hold professional indemnity insurance or maintain a minimum level of own funds for asset protection, unlike for traditional financial institutions.

Authorization: CASPs offering custody services will require authorization from a national competent authority (e.g., ATVP in Slovenia). This is a much more stringent licensing process than the current AML registration.

Key Requirements (MiCA Articles 59-64, and specific for custody Articles 65-68):

Legal form: CASPs must be legal persons established in the EU.

Governance: Robust governance arrangements, internal control mechanisms, risk management procedures.

Management body: Members must be of good repute and possess sufficient knowledge, skills, and experience.

Initial capital: Requirement for minimum initial capital or professional indemnity insurance (see below).