Do big countries require licenses for apps that copy someone's crypto trades?

"ESMA's Q&A ESMA_QA_2463 deals with these services, which consist of the automatic replication of investment strategies of other traders, allowing clie..."

"Notably, in order to comply with MiCA, firms that provide copy trading services in relation to cryptoassets will need to consult ESMA’s Q&A and supervisory briefing on auto trading services under MiFID II 2 to determine the appropriate classification and regulatory requirements for the provision of these services under MiCA."

"Due to the similarity in definitions and scope between (i) the investment services of “investment advice” and “portfolio management” under MiFID II 4 and (ii) the cryptoasset services of “providing advice on crypto-assets” and “providing portfolio management of crypto-assets” under MiCA, ESMA has determined that the guidance provided under MiFID II a"

"services that provide the service provider with investment discretion by automatically executing the trade signals of third parties will regularly qualify as portfolio management; 6 and services that require client action prior to the execution of a transaction may qualify as investment advice or investment brokerage depending on the interaction with the client."

"In the UK, the Financial Conduct Authority (FCA) also applies ESMA’s “MiFID Questions and Answers – Investor Protection and Intermediaries – Automatic execution of trade signals in June 2012” 8 guidance to copy trading services, which qualifies copy trading as portfolio or investment management in cases where the service provider has investment discretion by automatic"

"MiCA also applies to CASPs, which are legal entities or other undertakings that professionally provide one or more crypto-asset services to clients as their main occupation or business."

"Any business providing crypto-asset services in the EU, such as exchanges, custodians, brokers, and other services listed above, must obtain authorization as a crypto-asset service provider (CASP) from the national regulator."

"MiCA entered into force in 2023, with a phased rollout. Rules for ARTs and EMTs applied from June 30, 2024, while the full framework for crypto-asset service providers became applicable on December 30, 2024, followed by a transitional period with an EU-wide deadline of July 1, 2026."

"Article 59 already bars anyone from providing cryptoasset services in the EU without CASP authorization. The transitional rule only deferred that prohibition. It now applies in full."

"A firm operating under transitional cover could not passport into other member states, and ESMA has confirmed this in its statement on transitional measures."

"A pending application is not authorization. Only a granted authorization under Article 63 permits continued service."

"And because MiCA's reach extends well past the EU's borders , an organization headquartered outside the bloc is not automatically outside its scope."

"CEA section 1a(12) defines the term ``commodity trading advisor'' as any person who, for compensation or profit, engages in the business of advising others, either directly or through publications, writing, or electronic media, as to the value of or the advisability of trading in commodity interests."

"CEA section 1a(10) defines a ``commodity pool'' as any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity interests."

"Examine whether their copy trading services fall into the provision of investment advice and/or individual portfolio management and/or other regulated activities or services requiring registration or licensing, in order to comply with the applicable laws and regulations of the pertinent jurisdiction."

"CEA section 4m(1) makes it unlawful for any person whose intermediary activities satisfy either the CPO or CTA definitions to make use of themails or any means or instrumentality of interstate commerce in connection with its business as a CPO or CTA, unless so registered with the Commission."

"The same has applied to crypto-asset services since the European crypto regulation MiCAR took effect"

"section 1a(11) of the Commodity Exchange Act (CEA or Act) defines the term ``commodity pool operator'' as any person engaged in a business that is of the nature of a commodity pool, investment trust, syndicate, or similar form of enterprise, and who, with respect to that commodity pool, solicits, accepts, or receives from others, funds, securities, or property"

"The Australian Securities & Investments Commission (ASIC) observes copy trading that involves a licensee providing a facility that:"

"One regulator has already reviewed copy trading to ensure that lead traders are registered as investment advisors."

"regulators have encountered issues with services being provided on a cross-border basis which means they may lack data, and on occasion have had to request the home regulator to investigate further."

"Several regulators are planning supervisory work in the near future, including examining the copy trading practices of market intermediaries and their assessment of consumer harms, as well as the activities of popular lead traders."