When a key function holder resigns: what it costs to be wrong
When a key function holder resigns, the cost of getting it wrong is not the resignation itself. It is the interval between the resignation taking effect and the authority receiving proof that an equivalent person holds the role. Under Regulation (EU) 2023/1114 (MiCA), that interval carries no grace period. A missed notification or an unfit interim appointment turns a routine departure into a supervisory finding.
The governance condition that keeps running
Regulation (EU) 2023/1114 (MiCA) treats the fitness and propriety of the persons who effectively direct a crypto-asset service provider as a continuing condition of authorisation, not a one-off check completed at licensing. A key function holder — compliance, risk, anti-money laundering, or a member of the management body — is held to the same standard the authority applied when the licence was granted.
Their resignation removes someone the authority has already vetted. The obligation to keep an equivalent person in the role does not pause while a replacement is found. If the departing role also carried responsibility for information accompanying crypto-asset transfers, the gap touches an obligation under Regulation (EU) 2023/1113 (TFR) that runs transfer by transfer, with no interim exemption.
What changes the day the resignation takes effect
The practical effect is timing, not paperwork. From the date the resignation is confirmed, the firm operates with a governance gap the authority never approved.
A gap lasting a week rarely draws attention on its own. A gap with no interim appointment, no notification, and no documented reassignment of duties reads differently: it reads as a firm that has stopped meeting a condition of its own licence. That reading, once formed, is hard to undo later with an otherwise clean file.
What to do, in order
- Confirm the resignation date in writing. Management secures a dated letter or minute — the date the role is vacated, not the date it was announced, starts every clock that follows.
- Map which authorisation criteria the role covered. Compliance identifies whether the departing holder's fitness assessment supported AML controls, safekeeping, or a management-body seat.
- Appoint an interim holder or reassign the duties. The management body records the decision the same week, not after a permanent replacement is found.
- Assess the interim holder against the same standard. Compliance prepares the fit-and-proper file — declarations, CVs, conflict checks — before the authority asks for it, not after.
- Notify the competent authority through the firm's standing procedure. Legal or compliance sends the notification calculated from the resignation date, not from the date a permanent successor is confirmed.
- Update internal governance records. If the same holder also maintained records of processing for data protection purposes, treat that gap on its own track — incomplete records create separate exposure, and the fix follows a different procedure (see When records of processing are incomplete).
Who decides, and on what evidence
The competent authority that granted the original authorisation decides whether the interim arrangement satisfies the fit and proper standard. It decides on the documentation the firm submits: the appointment decision, declarations of no disqualifying history, and evidence that duties under Regulation (EU) 2023/1113 (TFR) have a named owner throughout the transition.
The authority does not decide on intent. A firm that meant to notify promptly but missed its internal deadline is assessed on the same file as a firm that never intended to notify at all.
Where the exposure sits
| Duty affected by the resignation | Governing act | What the authority checks |
|---|---|---|
| Fitness and propriety of the management body or key function holders | Regulation (EU) 2023/1114 (MiCA) | Whether an equivalent, vetted person holds the role without interruption |
| Information accompanying crypto-asset transfers (travel-rule duties) | Regulation (EU) 2023/1113 (TFR) | Whether a named person owns the duty transfer by transfer during the transition |
If your situation differs
If the firm already has a pre-approved deputy on file, the notification is a formality, not a fresh assessment — the authority already holds the deputy's fit-and-proper documentation.
If the key function holder's duties were split across a team spread across three countries, decide who owned each part of the role before the resignation, not after (see The team is spread across three countries ownership of).
If the resignation coincides with a separate event in the digital-asset structure — for example, a fork duplicating a token the firm services — treat the two as unrelated files. Continuity of a token and continuity of governance are assessed on different evidence (see A fork duplicates the token tokenised rights what it).
What this page does not cover
This page does not address unrelated supervisory triggers that happen to fall in the same period. A marketplace listing taken down over a trade mark dispute follows its own procedure and its own decision-maker (see When a marketplace listing is taken down).
It also does not set the exact notification deadline. That figure is fixed by the competent authority's own procedural rules and published guidance, and it varies by member state and by the seriousness of the role vacated.
Related situations
The same cost logic — a clock that starts before anyone announces it has started — applies to other supervisory triggers. See What it costs to be wrong in this situation for what happens when an on-site inspection is announced instead of a resignation.
If a key function holder has resigned or is about to, the sequence above determines whether the gap costs a warning or a licence review. Align the interim appointment and the notification before either clock runs out.
Verified
Checked against the consolidated texts of Regulation (EU) 2023/1114 (MiCA) and Regulation (EU) 2023/1113 (TFR) as published on EUR-Lex, 14 February 2025.
FAQ
What is the first step when a key function holder resigns?
Confirm the exact date the resignation takes effect and record it in writing. Every other deadline in this situation runs from that date, not from the date of announcement or from a board minute discussing a replacement.
Which deadline is already running?
The clock for notifying the competent authority. Under Regulation (EU) 2023/1114 (MiCA), the obligation to keep a fit and proper person in the role is continuous, so the notification clock runs from the resignation date even before an interim holder is named.
Who decides, and on what evidence?
The competent authority that granted the original authorisation decides, on the documentation the firm submits — the appointment decision, fit-and-proper declarations, and proof that duties under Regulation (EU) 2023/1113 (TFR) have a named owner throughout the transition.