February 2025 – On 15 February 2025, Czech Act No. 31/2025 Coll., on the implementation of European Union regulations in the area of financial market digitisation (the Digital Finance Act), came into force. This legislation serves as an adaptation act to the EU MiCA Regulation and introduces significant changes to the regulation of crypto-assets and financial markets.
Czech National Bank to supervise crypto-asset market
Under the Digital Finance Act, the Czech National Bank has been designated as the competent authority for crypto-assets. The Czech National Bank is now responsible for receiving notifications and applications under the MiCA Regulation and exercising supervisory powers over crypto-asset service providers (CASPs), crypto-asset issuers, entities offering crypto-assets to the public and the broader crypto-asset market.
Grandfathering provisions for CASPs
The EU MiCA Regulation includes grandfathering provisions to allow the existing CASPs to continue their operations while transitioning to full compliance with the new regulatory framework. These provisions are designed to ensure a smooth transition and prevent disruption in the crypto-asset market. Under the Digital Finance Act, the grandfathering period for CASPs providing services under a Czech trade licence (živnostenské oprávnění) before 30 December 2024 is extended until 1 July 2026, provided that the CASP applies for a licence under the MiCA Regulation by 31 July 2025. As the regulatory requirements under the MiCA Regulation for CASPs are substantial, CASPs should proceed swiftly with the preparation of their applications to the Czech National Bank.
Amendment Act and supervisory powers of Financial Analytical Office
In connection with the Digital Finance Act, the related Czech Act No. 32/2025 Coll., amending certain acts in connection with the implementation of European Union regulations in the area of the digitisation of the financial market and sustainability financing (the Amendment Act), entered into force also on 15 February 2025. The Amendment Act makes some necessary changes in connection with the implementation of the MiCA Regulation and the DORA Regulation (and certain other EU laws) into the Czech legal framework. The Amendment Act also grants the Financial Analytical Office (Finanční analytický úřad) supervisory powers over virtual asset service providers (VASPs) that fall outside the scope of the MiCA Regulation. Although VASPs are newly required to obtain a licence from the Financial Analytical Office are subject to its oversight, the regulatory treatment of VASPs is not as strict as the regulatory treatment of CASPs under the MiCA Regulation.
Tax treatment of crypto-assets
The Amendment Act also introduced the so-called time and value test for crypto-assets into Czech tax legislation. Under the time test, the sale of crypto-assets held for more than three years will be exempt from income tax. The value test, meanwhile, exempts from income tax low-value crypto-asset transactions. If an individual’s total income from crypto-asset transactions does not exceed CZK 100,000 in a calendar year, these transactions do not need to be reported in tax returns and are tax exempt. From a tax perspective, this brings the treatment of crypto-assets in line with the treatment of investment securities.
We would be happy to advise you on this new legal framework or assist you with the application process under the MiCA Regulation.