When a crypto-asset service provider receives its authorisation under Regulation (EU) 2023/1114 (MiCA), the attention of founders and boards tends to shift immediately to commercial matters, onboarding clients, passporting notifications and go-to-market. What often receives far less attention is that the authorisation itself rests on a set of continuing financial obligations which the competent authority will test not once, at application stage, but perpetually, through periodic reporting, annual reviews and supervisory engagement. A CASP that cannot produce accurate, timely and reconciled financial information is not merely running an untidy back office. It is at risk of breaching the conditions of its licence.

This post sets out what a licensed CASP operating in the European Union needs to keep in mind when it comes to its finances, bookkeeping and accounting, and why we built Axis Ledger specifically to serve this need.

Prudential safeguards are a living calculation, not a licensing formality

Article 67 of MiCA requires a CASP to maintain, at all times, prudential safeguards equal to at least the higher of two amounts: the permanent minimum capital requirement set out in Annex IV, which ranges from EUR 50,000 for advisory and order-related services through EUR 125,000 for custody and exchange services to EUR 150,000 for operators of trading platforms, and one quarter of the fixed overheads of the preceding year, reviewed annually.

The words that matter most in that provision are "at all times" and "reviewed annually". The fixed overheads requirement is a moving target. As the business grows, hires and spends, the quarter-of-fixed-overheads figure grows with it, and there will come a point in the life of most successful CASPs where it overtakes the Annex IV floor. Article 67(3) requires the calculation to be based on figures resulting from the applicable accounting framework, after deducting items such as staff bonuses and other discretionary remuneration, shared profits and other appropriations of profits. That deduction exercise cannot be performed on a shoebox of invoices. It requires a properly maintained general ledger, a considered chart of accounts that separates fixed from variable and discretionary expenditure, and management accounts prepared frequently enough that the firm knows, month by month, where its own funds position sits relative to the requirement.

Article 67(4) permits the safeguards to be held as own funds, consisting of Common Equity Tier 1 items as defined by reference to Articles 26 to 30 of Regulation (EU) No 575/2013 with the deductions under Article 36 applied in full, as an insurance policy meeting the conditions of Article 67(5) and (6), or as a combination of both. Where own funds are used, the CET1 qualification exercise is an accounting exercise. Intangible assets, deferred tax assets dependent on future profitability and certain other items must be deducted, and a CASP whose balance sheet carries capitalised development costs or significant intangibles may find its eligible own funds materially lower than its accounting equity. This is a trap that catches technology-heavy crypto businesses with some regularity, and it is only visible if the balance sheet is being prepared and reviewed with the prudential overlay in mind.

The application file becomes the supervisory baseline

Commission Delegated Regulation (EU) 2025/305 sets out the regulatory technical standards specifying the information to be included in an application for authorisation as a CASP, and Commission Implementing Regulation (EU) 2025/306 provides the accompanying templates. Applicants are required to submit, among other things, historical financial statements where they exist, forecast accounts across multiple scenarios, a description of the prudential safeguards and evidence that the Article 67 requirement is met, together with descriptions of accounting procedures and internal control mechanisms.

The practical consequence is frequently underestimated. The financial forecasts, the prudential calculations and the described accounting procedures submitted at application stage become the baseline against which the competent authority supervises the firm. Under Article 69 of MiCA, a CASP must notify its competent authority of any changes to its management body and of any material changes to the conditions for authorisation before implementing them. A firm whose actual financial trajectory diverges significantly from its authorised business plan, or whose accounting function bears no resemblance to the procedures it described in its application, will find those divergences surfacing in supervisory correspondence. The finance function is, in this sense, a compliance function.

Client asset segregation is an accounting discipline

Article 70 of MiCA requires CASPs that hold crypto-assets belonging to clients, or the means of access to such crypto-assets, to make adequate arrangements to safeguard clients' ownership rights and to prevent the use of clients' crypto-assets for the firm's own account. Where a CASP holds clients' funds, those funds must be placed with a central bank or a credit institution by the end of the business day following receipt, in accounts separately identifiable from those used to hold the firm's own funds.

For custodians, Article 75 goes further. It requires a register of positions opened in the name of each client, corresponding to each client's rights to the crypto-assets, and requires that clients' holdings be segregated from the custodian's own holdings both on the ledger of the CASP and, in terms of on-chain arrangements, held on separate addresses from the CASP's proprietary assets. Article 75(7) makes the CASP liable to its clients for the loss of crypto-assets or of the means of access resulting from an incident attributable to it, capped at the market value of the assets lost at the time the incident occurred.

Each of these obligations is, at its core, a reconciliation obligation. A CASP must be able to demonstrate, on any given day, that the crypto-assets recorded in its client position register agree to the balances actually held at the relevant on-chain addresses and sub-custodians, and that client fiat balances agree to the segregated bank accounts. This is triple-entry work in practice: the internal ledger, the client register and the blockchain itself must be reconciled to one another, across potentially thousands of wallet addresses, multiple chains and a fiat banking layer. Traditional bookkeeping tooling was not built for this, and a finance function that attempts it in spreadsheets will not survive its first supervisory inspection or its first audit.

The accounting treatment of crypto-assets remains unforgiving

MiCA regulates conduct and prudential matters but does not prescribe an accounting framework, and IFRS still contains no standard written for crypto-assets. Under the IFRS Interpretations Committee's 2019 agenda decision, holdings of cryptocurrencies are generally accounted for as intangible assets under IAS 38, or as inventories under IAS 2 where they are held for sale in the ordinary course of business, with broker-traders permitted to measure at fair value less costs to sell. The intangible asset treatment, with its cost-less-impairment default, can produce financial statements that bear little relationship to economic reality in a volatile market, and the revaluation model is available only where an active market exists.

Layered on top of this are the questions that arise daily in a CASP's operations: the recognition and measurement of fees earned in kind, the treatment of staking rewards and airdrops, the cost basis tracking of assets acquired across venues at different prices, foreign exchange and crypto-to-crypto conversion gains, and the presentation of client assets, which, properly segregated, should not sit on the CASP's own balance sheet at all. Getting these judgements wrong does not only distort the statutory accounts. Because the Article 67 fixed overheads calculation and the CET1 own funds computation are both derived from the accounting figures, an accounting error propagates directly into a prudential error.

Alongside all of this sits Article 68 of MiCA, which requires CASPs to keep records of all crypto-asset services, activities, orders and transactions undertaken, sufficient to enable the competent authority to fulfil its supervisory tasks, and Article 74, which requires firms providing certain services to maintain a plan for an orderly wind-down. A credible wind-down plan is a financial document. It rests on an accurate picture of the firm's cost base, its client asset positions and its liquidity, none of which can be produced by a finance function that is months behind on its bookkeeping.

Where Axis Ledger comes in

Axis Ledger was launched as the accounting and bookkeeping division of Axis Group precisely because we kept encountering the same gap. Legal and regulatory advisers would take a CASP through authorisation, and the firm would then hand its finance function to a generalist accountant with no visibility over wallets, chains, sub-custodians or the prudential overlay, and no understanding of why the difference between a fixed and a discretionary expense matters to the regulator.

Axis Ledger operates as a fractional CFO and digital asset accounting function built for regulated crypto businesses. We maintain the books to the standard the framework demands, running continuous on-chain to off-chain reconciliations across client registers, wallet infrastructure and segregated fiat accounts, preparing management accounts that track the Article 67 position in real time rather than discovering a shortfall at year end, structuring the chart of accounts so that the fixed overheads and CET1 computations fall out of the ledger rather than being reverse-engineered under audit pressure, and preparing the financial elements of authorisation applications, ongoing regulatory returns and wind-down plans in a form the competent authority will recognise. Because we sit within the same group as Axis Advisory, the regulatory reasoning and the numbers are never produced in isolation from one another.

For a licensed CASP, the finance function is not back office. It is the evidentiary foundation of the licence itself. If you are preparing an application, approaching your first annual fixed overheads review, or simply suspect that your current bookkeeping arrangements would not withstand a supervisory request for a same-day client asset reconciliation, we would be glad to talk.

This post is provided for general information purposes and does not constitute legal, regulatory, accounting or tax advice. Specific advice should be sought on the application of MiCA and the accompanying technical standards to your circumstances.