In a new position paper, Adan examines the implications of the European Markets in Crypto-Assets Regulation (MiCA) for Digital Asset Service Providers (DASPs) regarding fund segregation requirements. MiCA requires DASPs to separate and protect their clients’ assets; however, this continuous segregation requirement poses operational challenges in practice, particularly during transactions where service or conversion fees lead to a temporary mix of funds.

The strict separation of client assets, while essential for investor protection, raises feasibility concerns for DASPs regularly handling small transactions or engaging in portfolio management, trading, or staking activities, which often prevent a continuous and real-time separation of assets.

A recommendation adapted to sector-specific needs

To balance investor protection with the technical constraints faced by DASPs, Adan recommends a pragmatic approach. We propose allowing DASPs to segregate client assets from their own assets within a minimum period of five working days when the amounts involved are below the company’s own funds. This flexibility would enable DASPs to meet their obligations without compromising operational viability while ensuring sufficient investor protection. Read the full position here.