The essential distinction: MiCA requires authorised custodians to protect client ownership and separate client assets from their own estate. It does not create a €100,000 crypto guarantee or an EU investor compensation fund for CASP customers.
What MiCA does protect
Article 70 requires a CASP holding client crypto assets or access keys to make adequate arrangements to safeguard the client’s ownership rights, especially if the provider becomes insolvent. Client assets must not be used for the provider’s own account.
Custody providers must keep client crypto legally segregated from their own estate so that the provider’s creditors cannot claim it merely because the CASP fails. MiCA also requires custody policies, position statements and procedures to return assets. Custodians can be liable for losses caused by incidents attributable to them, subject to the regulation and the custody agreement.
What MiCA does not provide
ESMA’s consumer warning is explicit: MiCA does not provide a comparable investor-compensation safety net if a crypto-asset service provider is unable to return client crypto. Regulation reduces legal and operational risk; it does not remove market, cyber, custody or insolvency risk.
- No EU-wide guarantee against a fall in the market value of crypto.
- No automatic repayment merely because a CASP becomes insolvent.
- No guarantee against every hack, fraud or operational failure.
- No protection for products or providers outside MiCA’s scope.
What about euros held by an exchange?
Client money and crypto are different. Under Article 70, a CASP that receives client funds generally has to place them with a credit institution or central bank by the end of the following business day and keep them in an identifiable separate account. That is a safeguarding obligation.
Whether a particular euro balance is covered by a national deposit-guarantee scheme depends on the legal structure, account ownership and the institution holding the money. Do not assume that the familiar €100,000 bank-deposit guarantee automatically applies to a balance shown inside a crypto app. Read the client-money terms and identify the bank or payment institution involved.
MiCA licence versus bank licence
| Protection | MiCA CASP | Bank deposit |
|---|---|---|
| Client-asset segregation | Required for custody and client funds | Different banking and depositor rules apply |
| EU-wide compensation for crypto | No | Not applicable to crypto assets |
| Deposit guarantee | Not created by a CASP licence | Eligible deposits can be protected under national schemes |
| Market losses | Not protected | Deposit value is not a traded crypto position |
Five checks before depositing
- Confirm the exact legal entity in the official CASP data.
- Check that custody is one of the entity’s authorised MiCA services.
- Read how client crypto and fiat funds are held and segregated.
- Check whether the service is provided by the EU entity or a global affiliate.
- Keep records and avoid leaving more assets on a platform than you need to use.
Primary sources
Last reviewed 29 July 2026. This is general information, not legal, financial or investment advice.