Are You Ready for MiCA? –
The Grandfathering Period Explained

In regulatory terms, grandfathering refers to an exemption that allows individuals or entities to continue activities or operations that were approved before the implementation of a new law or regulation. This is exactly the case with MiCA: Article 143 allows crypto-asset service providers that conducted their services according to the applicable law before 30 December 2024 to continue their operations until 1 July 2026 at the latest, or until they receive or are denied authorization to operate as CASPs, whichever comes first.

Whether they allow for a grandfathering period and for how long is decided by each member state — they can also choose a shorter period, which many countries have done, especially after the European Securities and Markets Authority called on member states to limit the grandfathering period to a maximum of 12 months. This means that companies currently providing crypto-asset services must carefully assess whether they can benefit from this clause and for how long in the country where they are registered.

Many countries have decided to allow a transitional period for these companies, with most setting deadlines either in mid-2025 or at the end of 2025. However, there may be minor differences in these exact timeframes. For instance, Lithuania set the end of its grandfathering period for 1 June 2025, while Latvia and Finland chose 30 June 2025. Similarly, toward the end of the year, Ireland and Slovakia’s transition period will end on 30 December, while in Austria, Germany, Spain, and Italy, it extends until 31 December. Some member states have decided to allow the grandfathering period to last until mid-2026, including Denmark, Estonia, France, and Malta. However, the precise end date may vary, just as it does for deadlines in 2025.

It is also crucial to remember that relevant legislation (implementing laws) might still be in progress or subject to modification in some member states. Therefore, affected companies must stay updated on changes in their home country and keep an eye out for news. For example, Hungary initially did not plan to allow a transitional period but recently decided to amend its implementing law, now allowing a grandfathering period until 1 July 2025.

Those benefiting from this period should also be aware that the competent authorities or legislators of some countries may have set specific deadlines for applying for a CASP license to qualify for the full transitional period. In some countries, such as Sweden and Germany, only companies that apply for a CASP license by a certain date can benefit from the full transition period. For example, in Germany, the grandfathering period extends until 31 December 2025, but entities wishing to continue operations beyond this date must apply for a CASP license by 31 August 2025.

Another important practical aspect of grandfathering is that grandfathered entities are not eligible to passport their crypto services to other member states until they acquire their CASP license. This means that they can only conduct cross-border activities if they comply with relevant legislation in both their home and host member states. Additionally, grandfathered entities are prohibited from providing cross-border services to countries where the grandfathering clause is not (or is no longer) applicable.
Consequently, even if a company’s home country allows a lengthy transitional period, it may be worthwhile to consider applying for a CASP license under MiCA before the final deadline. The benefits of operating under existing national legislation may be limited by challenges in providing crypto-asset services in other member states.

The most important question is to know which of these rules will apply to your company. Here are a few steps to get started:

1. Can I be a grandfathered entity?

Check the national legislation related to MiCA in the country where your company is registered! Although regulations like MiCA as a rule are directly applicable in member states, if a country decides to allow for a transitional period, it may require new legislation or amending the existing laws. Check if that member state decided to apply a grandfathering period. Is there an earlier deadline for applying for a CASP license? Also, don’t forget to look out for possible updates and changes.

2. Where will I have to apply for authorisation?

Check which is the designated competent authority in your country for obtaining a CASP license! Each EU country has designated an authority that will be responsible for this.

3. Has the competent authority communicated any deadlines or information about the authorisation?

Check what the competent authority had communicated about obtaining the license. Can you already apply? Will they only take applications from 1 January? Have they published other relevant deadlines or information published?

4. How will grandfathering affect my cross-border activities?

If you have cross-border activity, make sure whether there is a grandfathering period in other member states where you provide your services. Is it shorter or longer than the one in your country?

5. Create a strategy for the transition period!

Based on the information you gathered, check whether you can benefit from the grandfathering period, and if yes, create a strategy considering all relevant aspects that align with your business strategy, and ensure that you can keep up your operations without disturbance while being mindful of all the necessary deadlines.