Fit-and-proper tests for crypto company directors under MiCA
Under MiCA, the fit-and-proper assessment is not a formality but a licensing gate that can delay or sink an application. Directors and qualifying shareholders of a CASP must demonstrate competence, integrity, and independence to the standard set by the authorising national competent authority.
Why fit-and-proper testing became a licensing gate under MiCA
MiCA replaced a patchwork of national crypto rules with a single authorisation regime for crypto-asset service providers across the EU. Since the regulation became fully applicable, any firm seeking a CASP licence must satisfy its home-state competent authority that the people running it are suitable. That suitability test applies to members of the management body, to senior managers, and to qualifying shareholders. It is not a box-ticking exercise: supervisors can refuse authorisation, impose conditions, or later withdraw a licence if the people in control no longer meet the standard.
The shift matters for founders because crypto businesses are often built by small, fast-moving teams with unconventional backgrounds. A developer who has never held a regulated role, or a shareholder whose wealth comes from early token holdings, will be assessed against criteria designed for banks and investment firms. The burden of proof sits with the applicant. Regulators expect documented evidence, not assurances, and they compare the submission against the requirements in the MiCA authorisation articles and the European Banking Authority and ESMA guidelines on the assessment of suitability.
Who exactly gets assessed: directors, senior managers, and qualifying shareholders
The management body is the primary target. Under MiCA, at least one member of the management body, or where relevant the management body collectively, must be of good repute and possess sufficient knowledge, skills, and experience to perform their duties. In practice this means the board as a whole must cover legal and regulatory knowledge, financial and accounting literacy, and an understanding of the crypto-asset business and its specific risks, including custody, market abuse, and technology risk. A two-person board where neither member has compliance or finance experience is a common reason for supervisory pushback.
Senior managers who are not board members can also be caught. If a person effectively directs the business, runs a key function, or holds a controlled function, the competent authority may require them to be assessed individually. The same applies to qualifying shareholders, meaning natural or legal persons holding a qualifying holding, typically around 10 percent or more of capital or voting rights, or exercising significant influence. Supervisors look through nominee structures and can require information on the ultimate beneficial owners behind corporate shareholders.
The assessment is not limited to the moment of authorisation. MiCA requires CASPs to notify the competent authority of any change in the management body and to ensure that suitability is maintained on an ongoing basis. A new director appointed two years after licensing must still pass muster, and a shareholder who increases their stake may trigger a fresh assessment. Firms that treat fit-and-proper as a one-off filing create a supervisory risk that can surface during a routine inspection or a licence variation request.
What supervisors actually test: integrity, competence, and independence
Integrity is assessed through criminal record checks, regulatory references, and an examination of the person's business history. Supervisors look for convictions for financial crimes, fraud, money laundering, or market abuse, but also for less obvious red flags: bankruptcy proceedings, disqualification as a director, unresolved civil litigation involving dishonesty, or a pattern of regulatory sanctions in other jurisdictions. A clean criminal record is not sufficient if the person has a history of failed companies or unpaid judgments. The EBA guidelines expect a holistic assessment, and gaps in a CV are treated as a problem rather than a neutral fact.
Competence covers both formal qualifications and practical experience. A director with ten years in payments or traditional finance may satisfy the financial literacy requirement but still lack crypto-specific knowledge. Conversely, a crypto-native founder may understand the technology but have no experience of regulatory reporting, capital requirements, or governance. Supervisors increasingly expect a mix on the board, and they may accept a director who lacks a particular skill if the board collectively covers it and the individual has demonstrated a willingness to acquire the missing knowledge through training.
Independence is the criterion founders most often underestimate. A management body dominated by founders, family members, or a single shareholder may be seen as unable to challenge executive decisions. MiCA does not require a majority of independent directors in the way some banking rules do, but supervisors expect that the management body can act with independence of mind. Where the same person is both a major shareholder and the sole decision-maker, regulators may ask for additional non-executive oversight, a separate risk function, or a formal governance charter that documents how conflicts are managed.
Evidence pack: documents and disclosures that support a fit-and-proper file
A credible fit-and-proper file is built from primary documents, not self-declarations. For each director and qualifying shareholder, expect to provide a detailed curriculum vitae with dates and responsibilities, certified copies of identity documents, proof of address, and a criminal record certificate from each jurisdiction where the person has lived or worked in recent years. Many competent authorities ask for a declaration of good standing and, where the person has worked in financial services, references from previous employers or regulators. These references can take weeks to obtain, so they should be requested early in the licensing project.
Financial information is also relevant. Qualifying shareholders must demonstrate that their acquisition of the holding is financed by legitimate means, that they have the financial soundness to support the CASP, and that the structure does not facilitate money laundering or terrorist financing. Source-of-funds evidence can include audited accounts, tax returns, sale contracts, or bank statements. For founders whose wealth is largely in crypto, a clear audit trail from exchange records, wallet histories, and tax filings is essential; supervisors are familiar with digital assets and will not accept a screenshot as proof of funds.
Governance documents complete the pack. The applicant should submit an organisational chart, a description of the management body's responsibilities, terms of reference for board committees, a conflicts-of-interest policy, and a training plan for directors. Where a director is being proposed to fill a specific gap, such as compliance or technology, the file should explain how that person's experience maps to the role. Supervisors read these documents as evidence of whether the governance is real or merely drafted for the application.
Common failure points and how to avoid them
The most frequent failure is a management body that is too thin. A single founder-director with no independent oversight, no compliance background, and no documented governance will almost always attract questions. The fix is not to add names for appearance; supervisors interview directors and can tell whether they understand the business. A better approach is to recruit a non-executive director with regulated financial services experience and to give that person a real mandate, documented in board minutes and committee terms of reference.
Another recurring problem is incomplete disclosure. Applicants sometimes omit a past directorship in a struck-off company, a foreign regulatory inquiry, or a shareholder whose ownership is held through a trust. Supervisors cross-check against public registers, other regulators, and, increasingly, commercial databases. An omission discovered later is treated as a integrity issue, even if the underlying fact would not have been disqualifying. Full disclosure with a clear explanation is almost always better than a gap that looks like concealment.
Timing is a third trap. Fit-and-proper checks run in parallel with the rest of the MiCA application, and delays in obtaining criminal record certificates or regulatory references can push back the whole authorisation. Founders should begin collecting personal documentation before the company is incorporated, and should avoid changing the board mid-application unless necessary. If a director resigns or a new shareholder joins during the review, the competent authority must assess the change, which can reset parts of the timetable.
How fit-and-proper interacts with capital, substance, and ongoing supervision
Fit-and-proper is one pillar of the MiCA authorisation, alongside capital, governance, and operational substance. EU CASPs face minimum capital requirements that vary by activity class, with the main tiers set at EUR 50,000, EUR 125,000, and EUR 150,000 depending on whether the firm operates a trading platform, provides custody, or offers a broader range of services. Supervisors assess whether the people in control have the capability to manage a firm of that scale, and a board that cannot explain the capital calculation or the prudential reporting obligations will raise doubts about competence.
Substance requirements reinforce the point. A CASP must have a real place of business in the home member state, and the management body must be able to direct the business from there. A board that meets once a year by video call, with all decisions taken by a founder based outside the EU, is unlikely to satisfy the regulator. Fit-and-proper assessments therefore look at how often the management body meets, whether minutes show genuine debate, and whether directors have the time to discharge their duties given their other commitments.
After authorisation, supervision continues. Competent authorities can require periodic attestations that directors remain suitable, and they can act if a director becomes subject to criminal proceedings or a regulatory sanction. Firms should maintain a live register of directors and qualifying shareholders, with supporting documents kept up to date. When a director's circumstances change, the notification obligation is usually immediate, and failure to notify can itself be a breach. Treating fit-and-proper as a living compliance process rather than a licensing hurdle is the difference between a stable licence and a supervisory problem.
How to Choose the Right Jurisdiction
Work the decision in this order: customers first, everything else second:
- Who are your customers? EU retail means you need a MiCA passport (Lithuania, Malta or another EU CASP). US customers mean state-by-state money-transmitter licensing or a FinCEN MSB, so consider a Canada MSB or a US setup. Latin America, Asia or HNW clients mean an offshore or territorial base such as Panama is usually the better fit.
- Do you need a regulator badge? A public-facing exchange chasing institutional partners and fundraising often needs the reputational lift of an EU, Swiss or VARA licence. An OTC desk or token treasury usually does not.
- What is your budget and timeline? Offshore and territorial routes set up in weeks for tens of thousands; premium onshore licences take many months and six figures.
- What about tax? Territorial-tax jurisdictions like Panama charge 0% on foreign-source income; EU jurisdictions apply standard corporate tax. Factor total cost of ownership, not just setup fees.
For many offshore-first founders, Panama lands at the intersection of fast incorporation, low cost and 0% tax on foreign-source income, which is why it features so heavily in our work. But the honest answer is that the “best” jurisdiction is the one that matches the four answers above, and that is a conversation worth having before you spend a cent. See our cost breakdown and application process to ground the decision in real numbers.
Banking and Compliance: Where Most Setups Actually Stall
Incorporation is the easy part of any crypto project. Banking is where timelines slip and where under-prepared founders lose months. Since 2023, banks and payment processors worldwide have tightened their onboarding of crypto-adjacent businesses, and they now expect a genuinely professional application , not a one-page business summary. A thin file is simply rejected, and re-applying with the same bank is far harder than getting it right the first time.
Three documents do the heavy lifting. The first is a written AML/KYC compliance program: your customer-onboarding flow, transaction-monitoring rules, sanctions and PEP screening, a named compliance officer, and record-keeping policies. The second is a clear, evidenced source-of-funds file for both the company and its beneficial owners. The third is a coherent business description that explains who your customers are, how money moves, and what volumes you project. Banks approve businesses they understand; ambiguity reads as risk.
Sequencing matters as much as substance. The correct order is: incorporate the operating entity, build the compliance program, assemble the source-of-funds package, and only then approach banking, ideally through a warm introduction rather than a cold application. Founders who approach banks mid-setup, before their file is complete, create the very delays they are trying to avoid. We make direct introductions to banks and crypto-friendly payment rails as part of every engagement, but the introduction only works if the file behind it is ready.
None of this is optional, and none of it changes much from one jurisdiction to the next, the compliance bar is now broadly global. What changes is the appetite of local banks and the speed of onboarding. Our requirements checklist sets out exactly what you need to assemble before you approach a bank.
Crypto Licensing in 2026: The Bigger Picture
Choosing where to license a crypto business in 2026 is no longer a simple cost calculation. The regulatory map has hardened considerably over the last three years. In the European Union, the Markets in Crypto-Assets Regulation (MiCA) has replaced the patchwork of national VASP registers with a single Crypto-Asset Service Provider (CASP) authorisation that passports across all 27 member states. That passport is powerful, but it comes with capital requirements, governance obligations and a multi-month authorisation process that smaller projects often underestimate.
Outside the EU, the picture is more varied. Offshore and territorial-tax jurisdictions compete on speed, cost and privacy, while major financial centres such as Switzerland, the UAE and Singapore compete on credibility and institutional access. The Financial Action Task Force (FATF) sits over all of them: its “travel rule” and AML standards now apply, in some form, almost everywhere a serious crypto business would consider basing itself. Jurisdictions that ignore FATF expectations end up grey-listed, which quietly closes correspondent-banking doors for every company registered there.
This is why the question behind Fit-and-proper tests for crypto is rarely “which licence is cheapest?” It is “which regime matches my customers, my risk appetite and my banking needs?” An EU-retail exchange and an offshore OTC desk serving high-net-worth clients in Latin America have almost nothing in common in terms of the right base. Getting this decision right at the start saves you from the single most expensive mistake in the industry: licensing in the wrong place and having to re-domicile a live business.
Consulting24 has guided more than 200 crypto company setups across 15+ jurisdictions since 2017, which means we have seen how each of these regimes behaves in practice rather than just on paper. The summary below is the same framework we use with clients, and we are always happy to map it to your specific model. Start with our Panama vs Lithuania comparison to see how the trade-offs play out between an offshore base and an EU-passported one.
Common Mistakes to Avoid
The failures we see when founders research Fit-and-proper tests for crypto on their own are remarkably consistent, and almost all of them are avoidable. The first is licensing to the headline tax rate. A 0% jurisdiction is worthless if your customers legally require a regulated provider you cannot become there, and you will simply have to start again. Decide who you are allowed to serve first, then optimise for tax.
The second is treating the compliance program as paperwork. The AML/KYC program is not a formality to satisfy a regulator; it is the document your bank reads most closely. A generic template downloaded from the internet is transparent to any compliance officer and will sink your banking application. It needs to reflect your actual product, customer base and risk profile.
The third is underestimating banking lead time. Founders routinely budget for incorporation and forget that the bank account, the thing that actually lets the business operate, can take longer than the licence itself. Build banking into your launch timeline from day one, not as an afterthought.
The fourth is ignoring personal tax residency. A company in a low-tax jurisdiction does not erase your obligations where you personally live. Many founders create unexpected liabilities by structuring the company perfectly and ignoring themselves. We introduce qualified tax advisors precisely to close this gap.
The fifth and most expensive is choosing a provider on price alone. The cheapest setup that results in a rejected bank application or a re-domiciliation is far more expensive than doing it properly once. Ask any provider to itemise their fee and explain their banking track record before you commit.
What Happens After You Are Licensed
Getting licensed and banked is the start, not the finish. Every regulated or registered crypto business carries ongoing obligations, and letting them lapse is how companies lose their standing, and their banking. At minimum you will maintain a registered agent or local presence, file annual renewals or supervision fees, keep accounting records, and keep your compliance program live with periodic reviews and updated sanctions and PEP screening lists.
Most jurisdictions also expect you to keep your beneficial-ownership information current and to report material changes, new directors, new shareholders, a pivot in business activity, promptly. Transaction monitoring is not a one-time setup either; screening rules need tuning as your volumes and customer mix evolve. Banks may request periodic refreshes of your KYC and source-of-funds documentation, particularly after a year of trading or a significant change in activity.
This is why we offer ongoing maintenance on an annual retainer rather than treating setup as a one-off transaction. The cost of staying compliant is a fraction of the cost of losing a banking relationship and having to rebuild one from scratch. Plan for it in your year-two budget from the outset, and treat your compliance function as a living part of the business rather than a box you ticked at launch.
It is also worth planning ahead for growth. A structure that suits a pre-revenue startup may not suit the same company once it is processing meaningful volume, adding new product lines, or expanding into new markets. Many of the businesses we work with begin in a fast, low-cost offshore base to validate the model, then add a second regulated entity, an EU CASP, for example, once revenue justifies the cost and the market access genuinely matters. Designing the first structure with that possible second step in mind keeps your options open and avoids a disruptive re-domiciliation later. We map this growth path out with clients during the initial planning stage so the early decisions support, rather than constrain, where the business is heading.
Consulting24 has completed 200+ crypto company setups across 15+ jurisdictions. Talk to our team for a fixed-fee proposal and realistic timeline.
Learn more WhatsApp usEmail mardo@consulting24.co · Phone +372 58155779
About Consulting24 & Mardo Soo
Founder & CEO, Consulting24 · LinkedIn
Consulting24 is an eight-year-old advisory firm that has completed 200+ crypto company setups across 15+ jurisdictions since 2017. Founder and CEO Mardo Soo and the team specialise in crypto, VASP and exchange licensing, from Panama and the EU (MiCA) to Dubai, Canada and the offshore world. We don't push a single “best” jurisdiction; we map your business to the regime that actually fits, then handle incorporation, the AML/KYC compliance program, and banking and payment-processor introductions end to end.
Every engagement begins with an honest conversation about your customers, budget and timeline and ends with a fixed-fee proposal, so you know the all-in number before you commit. We also introduce vetted local lawyers and tax advisors wherever your structure requires them.
Operated by X24Consulting OÜ (Estonian Business Register code 16971898), Põrdi tn 3-63, 10156 Tallinn, Estonia · mardo@consulting24.co · +372 58155779
Frequently Asked Questions
Does MiCA require every director of a crypto company to pass a fit-and-proper test?
MiCA requires the management body collectively to be of good repute and to have sufficient knowledge, skills, and experience. In practice, competent authorities assess each member of the management body individually as part of the authorisation, and they can also assess senior managers who are not directors if those people effectively direct the business. The exact scope depends on the national competent authority, but a founder-director should expect to provide a full personal file.
What is a qualifying shareholder under MiCA and why does it matter for fit-and-proper?
A qualifying shareholder is generally a person who holds a qualifying holding, often around 10 percent or more of the capital or voting rights, or who can exercise significant influence over the CASP. MiCA requires the competent authority to assess the suitability of qualifying shareholders, including their integrity, financial soundness, and the legitimacy of the funds used to acquire the holding. This means founders cannot assume that only board members are scrutinised; the ownership chain matters too.
Can a crypto founder with no traditional finance experience be approved as a director?
Yes, but the assessment is collective as well as individual. A founder with deep crypto experience may satisfy the knowledge requirement for the business model, but the board as a whole must also cover compliance, finance, and governance. If the founder lacks those areas, the applicant should recruit additional directors or senior managers with regulated financial services experience. Supervisors are less concerned about a non-traditional background than about an unbalanced board with no one able to challenge the founder.
What documents are typically required for a fit-and-proper file?
Expect to provide a detailed CV, certified identity documents, proof of address, criminal record certificates from relevant jurisdictions, regulatory references where applicable, and a declaration of good standing. Qualifying shareholders must also provide source-of-funds and financial soundness evidence, such as audited accounts, tax returns, or sale contracts. Governance documents, including an organisational chart and conflicts-of-interest policy, are usually submitted alongside the personal files.
How long does a fit-and-proper assessment take during a MiCA application?
Timelines vary by competent authority and by the completeness of the file. Criminal record certificates and regulatory references are often the slowest items, and they can take several weeks depending on the jurisdictions involved. The assessment itself runs in parallel with the rest of the authorisation, so delays in personal documentation can extend the overall timetable. Starting the collection process before incorporation is a practical way to reduce the risk of delay.
What happens if a director fails the fit-and-proper test after the licence is granted?
The competent authority can require the firm to replace the director, and in serious cases it can restrict the firm's activities or withdraw the licence. MiCA also imposes ongoing notification obligations: the CASP must inform the regulator of changes in the management body and of any circumstances that affect a director's suitability. Failure to notify can be treated as a separate breach. Firms should monitor their directors' circumstances and update the regulator promptly.
Does a criminal record automatically disqualify a director under MiCA?
Not automatically, but certain convictions, particularly for financial crimes, fraud, money laundering, or market abuse, are strong grounds for refusal. Supervisors assess the nature of the offence, how long ago it occurred, and whether the person has demonstrated rehabilitation. Minor or unrelated offences may not be disqualifying, but they must be disclosed. Concealing a conviction is usually more damaging than the conviction itself, because it undermines the integrity assessment.
How does Consulting24 help with fit-and-proper preparation for MiCA licensing?
Consulting24, through X24Consulting OU in Estonia, supports founders with the full MiCA authorisation process, including the fit-and-proper component. That work covers board composition planning, director and shareholder documentation, governance policies, and coordination with the competent authority. The firm also advises on jurisdiction selection, including alternatives such as Panama, where there is no dedicated crypto licence and a Sociedad Anonima can be incorporated in roughly two to three weeks with 0 percent tax on foreign-source income. More information is available at https://www.consulting24.co/es/.
Related reading
More crypto-license guides on this blog
- Crypto License in Panama: Cost, Requirements & Setup (2026)
- Crypto Exchange License: How and Where to Get One in 2026
- Crypto License Cost by Jurisdiction: 2026 Comparison
Related crypto licensing routes
A few relevant guides on consulting24.co, each with real cost, timeline and requirements:
This article reflects 2026 market conditions and is general guidance, not legal or tax advice. Regulations change, so confirm specifics with qualified counsel before acting. Consulting24 (X24Consulting OÜ, Estonian reg. 16971898) introduces vetted local lawyers and tax advisors during every engagement.
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