The Czech National Bank (CNB) said Oct. 19 it is reviewing five crypto service license applications, while warning that authorization does not give customers the protections available for traditional investments.
The applications arrived after a European Union transition period for crypto service providers ended July 1. Two came from firms that had sought authorization before, the CNB said. It currently supervises 11 providers authorized in the Czech Republic.
The EU’s Markets in Crypto-Assets Regulation (MiCA) requires providers to obtain authorization to offer crypto services after the transition. A firm licensed in another member state may also serve Czech customers once it completes the bloc’s cross-border notification process. That means the CNB’s count of domestic license holders does not include every firm able to serve the market.
Authorization gives firms a route to customers beyond the country that approved them. For customers, however, it does not provide all the safeguards associated with traditional investment services. The CNB said those limits apply whether a provider received its license in the Czech Republic or elsewhere in the EU.
MiCA generally does not require providers to assess a customer’s knowledge or tolerance for risk unless they offer advice or manage crypto portfolios. It also provides no guarantee fund for losses arising from inadequate separation or safeguarding of customer crypto assets.
“People must remain cautious about where they put their money,” said Jan Procházka, a member of the CNB’s Bank Board.
The CNB said it is inspecting authorized firms and has ordered providers operating without the required permission to stop. Its proceedings on the five applications remain open, with no decision date announced.
