On-shore VASP in Slovakia

Registration, not a dedicated license: Currently, there isn't a specific "crypto custody license" in the traditional financial sense. However, entities providing services related to virtual assets, including custodian wallet providers, are considered "obliged entities" under Slovak AML law.

AML Obligations: This means they must comply with AML/CFT requirements, such as customer due diligence (CDD), transaction monitoring, suspicious activity reporting (SARs), and implementing internal risk management systems.

National Legislation: These obligations stem from Act No. 297/2008 Coll. on measures against the legalization of proceeds of crime and the financing of terrorism (Zákon č. 297/2008 Z. z. o ochrane pred legalizáciou príjmov z trestnej činnosti a o ochrane pred financovaním terorizmu). This Act has been amended multiple times to transpose the 4th, 5th, and 6th EU AML Directives.

Competent Authorities: For AML purposes, the Financial Intelligence Unit (FIU) within the Ministry of Interior is key, but the National Bank of Slovakia (Národná banka Slovenska - NBS) supervises financial institutions, which could include certain crypto-related activities if deemed financial services.

Segregation of Client Assets Rules (Current):

Insurance/Bonding Requirements (Current):

None specific to crypto custody: There are no national insurance or bonding mandates specifically for crypto custody providers under current Slovak law.

Cold Storage Mandates (Current):

No specific mandate: Slovak law does not currently mandate the use of cold storage for crypto assets. Custodians are expected to implement robust security measures, but the specific technology is not prescribed.

Qualified Custodian Definitions (Current):

Not explicitly defined for crypto: The concept of a "qualified custodian" as a specifically regulated entity for crypto assets does not exist under current Slovak law. Entities performing custody are primarily defined by their AML obligations.

Mandatory Authorization: Under MiCA (Title V), any entity providing "custody and administration of crypto-assets on behalf of clients" (Article 68) will be considered a Crypto-Asset Service Provider (CASP) and will need to be authorized by the national competent authority. In Slovakia, this will most likely be the National Bank of Slovakia (NBS).

Application Process: CASPs will need to apply for authorization, demonstrating compliance with various organizational, operational, and prudential requirements.

Passporting: Once authorized in Slovakia, a CASP can "passport" its services across the entire EU.

Strict Segregation Mandate: MiCA explicitly requires CASPs providing custody services to:

"Enter into a client agreement to specify their duties and responsibilities, and to ensure that clients’ rights are clearly established, including those relating to the ownership of the crypto-assets." (Article 68(2)(b))

All other titles, including those related to CASPs and custody, will apply from December 30, 2024.

Act No. 297/2008 Coll. on Protection Against Legalisation of Proceeds of Crime and Against Financing of Terrorism (AML Act): This is the primary legislation in Slovakia governing AML/CFT. It has been amended multiple times, most notably by Act No. 397/2019 Coll., which transposed the 5AMLD and extended its scope to virtual assets and VASPs.

Directive (EU) 2018/843 (5th Anti-Money Laundering Directive - 5AMLD): This directive extended AML/CFT obligations to VASPs for the first time.

Directive (EU) 2015/849 (4th Anti-Money Laundering Directive - 4AMLD): The foundational directive.

Virtual currency exchange services: Providers exchanging virtual currencies for fiat currencies, or vice versa, or between one or more forms of virtual assets.

Custodian wallet providers: Entities that provide services to safeguard private cryptographic keys on behalf of their customers, to hold, store, and transfer virtual assets.

Identification of the Customer and Verification of Identity:

Natural Persons: Full name, date of birth, place of birth, permanent address, nationality, type and number of identity document, and the issuing authority. Identity must be verified using reliable, independent sources (e.g., government-issued ID).

Legal Entities: Company name, registered address, registration number, identification of directors/management, and verification of their authority.

Identification of the Ultimate Beneficial Owner (UBO):

Continuously scrutinize transactions throughout the course of the business relationship to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Obligation to Report: Any transaction, attempted transaction, or activity where the VASP suspects or has reasonable grounds to suspect that funds are proceeds of criminal activity or are linked to terrorist financing.

Timing: Reports must be submitted promptly, usually immediately, once a suspicion arises.

Politically Exposed Persons (PEPs): Customers who are or have been entrusted with prominent public functions, their family members, or close associates.

High-risk jurisdictions: Customers or transactions involving countries identified as having strategic AML/CFT deficiencies by FATF or the European Commission.

Complex or unusually large transactions: Or transactions with an unusual pattern, without an apparent economic or lawful purpose.

New or developing technologies: Including virtual assets, where the risks may not be fully understood.

Non-face-to-face business relationships: Where there is no physical meeting with the customer.

Source of Funds (SoF) and Source of Wealth (SoW): VASPs must take reasonable measures to establish the source of funds and wealth involved in high-risk relationships or transactions.

19% for taxable income up to €47,504.04 (for 2024).

25% for taxable income exceeding €47,504.04 (for 2024).

Exemption Threshold for Small Sales (Effective Jan 1, 2024):

Tax Exemption: If the total income from the sale of virtual assets in a tax period does not exceed €2,400 and they were held for more than one year (365 days), this income is exempt from income tax.

Social and Health Contributions:

Crucial Exemption: If a virtual asset is held for more than one year (365 days) from its acquisition date, the profit from its sale is exempt from health insurance contributions and social insurance contributions. This is a significant benefit for long-term holders.

Regulator Name: National Criminal Agency (NAKA) – specifically the National Unit for Combating Financial Crime.

Seizure of assets: During the operation, authorities seized financial assets, movable property, and real estate worth approximately €15 million. This includes accounts, cryptocurrencies, and other assets believed to be proceeds of crime.

Regulator Name: National Bank of Slovakia (Národná banka Slovenska - NBS).

September 2023: Warning about financial services without NBS authorization.

May 2022: General warning regarding cryptocurrency risks.