The regulation of crypto assets is developing dynamically around the world, with the European Union setting a uniform framework for this innovative but risky sector through the MiCA Regulation. In Slovakia, where the National Bank of Slovakia (NBS) is responsible for supervision and regulation, future cryptoasset service providers are being given a unique opportunity to engage in pre-licensing dialogue.
What is pre-licensing dialogue?
Pre-licensing dialogue is a new feature that allows potential applicants for a license to provide crypto-asset services to engage in an open and constructive dialogue with the NBS prior to submitting an official application, with the aim of clarifying any key issues that may affect the application assessment process. This helps prevent potential complications and streamline the entire licensing process.
As a law firm, Hronček & Partners, s. r. o., we had the honor of representing our client during the first-ever pre-licensing dialogue with the NBS, which not only gave us valuable experience but also insight into key aspects of this new regulation. In this article, we share our insights and recommendations that may be useful to anyone planning to take this important step on the path to obtaining a license.
What are the benefits of pre-licensing dialogue?
Pre-licensing dialogue is a huge advantage for applicants for crypto asset service licenses. This process allows for:
A clear understanding of the NBS requirements: Before submitting an application, it is possible to obtain specific guidance and recommendations to help the applicant better prepare for the entire licensing process.
The opportunity to avoid errors and omissions: The dialogue provides an opportunity to clarify potential shortcomings in the submitted application before it is officially submitted, reducing the risk of rejection due to inconsistencies.
Greater transparency: The applicant gains a better understanding of what the NBS considers key in assessing license applications, which can greatly facilitate the entire process.
Our experience with the first pre-licensing dialogue
As one of the first participants in this process, we had the opportunity to see how this new model of cooperation works in practice. Our role as legal representatives was to prepare the client for all aspects of the dialogue and ensure that their documentation and processes were in line with legislative requirements.
During the meeting with the NBS, we appreciated the professional and constructive approach of the regulatory authority. The dialogue was conducted in a spirit of open discussion, with an emphasis on specific aspects of the client's planned services and their compliance with the MiCA Regulation.
Issues discussed during the dialogue:
During the dialogue, we discussed several areas that are crucial for the granting of a license. The most important topics discussed during our dialogue included:
The applicant's business model
The NBS requires applicants to clearly and in detail define their business model, the manner in which they will provide crypto-asset services and the secure management of crypto-assets. During the dialogue, we also focused on the target groups to which crypto-asset services will be provided and the means of access to such services.
Shareholder and personnel structure
The NBS emphasizes the transparency of the shareholder structure and the qualifications and professional background of the managers who will be responsible for providing these services. Questions therefore also focused on the composition of the staff, organizational structure, employee training, etc.
Compliance with AML/CFT regulations
One of the key areas emphasized by the NBS is ensuring policies and procedures to combat money laundering (AML) and terrorist financing (CFT), which is essential for any business operating in the field of crypto assets.
During the pre-licensing dialogue, we presented internal policies and mechanisms that ensure compliance with AML/CFT requirements. At the same time, we described in detail the procedures for identifying, verifying, and reporting unusual business transactions, including the designation of persons responsible for these activities. In this way, we demonstrated the client's readiness to meet the highest level of legal requirements.
Internal controls and complaint handling processes
The NBS requires a detailed description of internal control mechanisms designed to ensure business continuity and proper risk management, as well as policies to prevent conflicts of interest. At the same time, a clearly defined complaint handling process is required to enable the effective and fair resolution of customer complaints, thereby strengthening confidence in the services provided and ensuring compliance with the highest standards of ethical conduct.
Marketing and advertising activities
During the pre-licensing dialogue, we also addressed the issue of the applicant's planned marketing and advertising activities. The discussion focused on how the company plans to communicate with the public and potential clients, with an emphasis on transparency, truthfulness, and clarity of information provided about the services offered. The aim of these measures is to ensure that marketing activities promote client confidence and comply with all regulatory requirements.
Recommendations for future applicants
Based on our experience, we offer some practical advice for those planning to undergo a pre-licensing dialogue with the NBS:
Thorough preparation is key: Make sure that the necessary documentation, from the business plan to internal policies, is detailed and complies with MiCA requirements.
Focus on compliance: Regulatory requirements, particularly in the areas of AML and data protection, are particularly strict. We recommend investing in experts who can help you design appropriate measures.
Don't be afraid to ask questions: The pre-licensing dialogue is a space for discussion.
Feel free to raise any questions or concerns that could affect the licensing process.
Choose the right partners: Legal and technical experts who understand the regulations and technological specifics of crypto assets are an invaluable part of the preparation process.
How to prepare for the pre-licensing dialogue with the NBS
Successfully completing the pre-licensing dialogue with the NBS requires not only thorough preparation but also adherence to specific procedures to ensure the meeting is effective. Based on our experience and the NBS's recommendations, here is an overview of the steps you should take before the meeting itself:
1. Complete and submit the questionnaire
One of the first steps is to provide a completed questionnaire with attachments. This questionnaire contains basic information about your company, planned services, and strategic goals. To ensure that the documentation is delivered securely:
Zip and password-protect the questionnaire and attachments.
Send the file by email to crypto@nbs.sk at least five working days before the meeting.
After sending, the NBS will send you instructions on how to send the password for the zipped file.
2. List of questions for the regulator
If you have specific questions regarding the licensing process or regulation, it is important to prepare them in advance. Send this list to the same email address crypto@nbs.sk at least five working days before the meeting. This will allow the NBS to prepare for your questions in advance and provide you with the most specific answers possible.
3. Preparation for the company presentation
At the beginning of the pre-licensing dialogue, you should briefly introduce your company and its plans. The presentation should include:
Overall business strategy: How your business currently operates and what its long-term goals are.
Planned changes and licensing intentions: What new services do you plan to provide and how do you intend to adapt to crypto asset regulation?
Specification of target clientele: What type of clients do you want to provide your services to?
Plans to operate in other Member States: If you plan to expand outside Slovakia, it is important to emphasize this.
4. Study of relevant legislation
You should come to the meeting with a thorough knowledge of the legal framework governing the activities of cryptoasset service providers. This includes not only the rules laid down in the MiCA Regulation, but also local legislation. The NBS expects applicants to be prepared to discuss the requirements for granting a license, including compliance, security, and other key aspects.
Conclusion
The pre-licensing dialogue with the NBS is a welcome step towards a modern, transparent, and effective regulatory process. It allows future crypto asset service providers to better understand the regulator's expectations and prepare for the challenging licensing process.
Our experience with this process has convinced us that quality preparation, thorough knowledge of the regulations, and an open approach are the keys to success. We believe that this new tool will help not only applicants but also the NBS to ensure that the Slovak crypto asset market is safe, innovative, and fully compliant with European legislation.
