CZECH REPUBLIC Law and Practice Contributed by: Ondřej Mikula, Jan Šovar and Markéta Klabouchová, FINREG PARTNERS
than providing financial services, they do not typically fall under specific financial regulations. However, they must comply with data protection laws like the GDPR and may also be subject to the new AI Act or electronic identification and trust services regulation. In these cases, they must adhere to relevant regulations and obtain If a regulated entity outsources functions to a regtech provider that it would typically perform itself, it must comply with outsourcing regula - tions and soft law requirements (see 2.8 Out- sourcing of Regulated Functions ), unless the activity has no impact on the entity’s obliga - tions. The applicable requirements depend on the type of regulated entity and the outsourced function, including whether the function is criti - cal or important. necessary authorisations if required. 9.2 Contractual Terms to Assure Performance and Accuracy 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry While the Czech Republic has been active in the blockchain field, most of the innovation has come from fintech companies, with traditional players remaining cautious about adopting blockchain. A notable Czech blockchain project is ElA, which unites private entities like IBM and government institutions such as the Ministry of Industry and Trade. ElA’s blockchain platform serves as a trusted space for document and transaction registration, as well as for digital property registration. The Blockchain Notarius app is used to verify document authenticity, such as business con -
tracts and certificates. The latest development, the National Blockchain Registry (the “NABRE” ), allows real-time verification of information, events, and data authenticity. The NABRE includes features like digital proxies to counter deep fakes and a per rollam voting application for online meetings. With the introduction of MiCA, traditional players are expected to show more interest in block - chain, as it provides clearer rules for crypto- activities and greater legal certainty, alongside simplified entry conditions. 10.2 Local Regulators’ Approach to Blockchain Most financial market regulation, including for innovative technologies like blockchain, comes from the EU, limiting the legislative powers of regulators in the Czech Republic. However, in response to MiCA and the perceived high risk of the crypto-asset sector, new legislation has been proposed to strengthen oversight of per - sons providing crypto-asset-related services as a business not covered by MiCA. These pro - viders will need to undergo an authorisation procedure with the FAO, rather than a notifica - tion procedure with the Trade Office. To obtain authorisation, providers must meet conditions such as demonstrating reliability, being debt- free, providing a CZK250,000 security, and sub - mitting a business plan. This regime is expected to take effect in the first half of 2025. Local regulators mainly issue opinions to clarify existing legislation, such as when authorisation from the CNB is needed for certain crypto-asset activities, or issue warnings about unauthorised companies in the sector. As the CNB will assess and grant MiCA authorisations, it has held semi - nars over the last year to outline its expectations and requirements.
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