MiCA After 1 July 2026: What the End of Grandfathering Means for Crypto Businesses

At a glance 

1.  The MiCA transitional period expired across the EU on 1 July 2026. There is no extension mechanism in the regulation and ESMA has confirmed none will be granted.

2.  Member states were permitted to shorten the period. Six closed theirs on 30 June 2025, a year before the EU-wide date, including Latvia, the Netherlands and Poland.

3.  After 1 July 2026, any entity providing crypto-asset services to EU clients without a MiCA licence is in breach of EU law and must cease offering those services.

4.  ESMA expects unauthorised providers to have implemented orderly wind-down plans, including offboarding clients and transferring their crypto-assets to an authorised provider or a self-hosted wallet.

5.  Non-EU entities may not serve or solicit EU clients outside the narrow reverse solicitation exception, and ESMA has confirmed this applies business to business as well as to retail.

The transitional regime that allowed crypto businesses to keep operating under national law while MiCA came into force has now closed everywhere in the European Union. For firms that obtained authorisation, the change is procedural. For those that did not, the position has moved from a compliance deadline to a question of whether the business can lawfully serve EU clients at all.

The most common misunderstanding is that 1 July 2026 was the operative date. For a large part of the market it was not, because more than a third of member states closed their windows earlier, several of them a full year earlier. This article sets out what the transitional regime was, when it actually ended in each member state, what ESMA now expects, and what routes remain open.

What the transitional period was

Article 143(3) of MiCA provided that crypto-asset service providers which had provided their services in accordance with applicable law before 30 December 2024 could continue to do so until 1 July 2026, or until they were granted or refused an authorisation under Article 63, whichever was sooner. Member states could decide not to apply the regime at all, or to reduce its duration, where they considered their pre-existing national framework less strict than MiCA.

Two conditions had to be satisfied to rely on it. The business had to have been providing crypto-asset services before 30 December 2024, and it had to have been doing so lawfully under the applicable national framework. A firm that began operating after that date, or that operated outside a national registration regime that applied to it, was never inside the transitional regime and could not rely on it at any point.

ESMA made this explicit in its April 2026 statement, noting that two categories of entity were not permitted to provide crypto-asset services even before 1 July 2026: those that had not been providing services lawfully before 30 December 2024, and those active in member states where the transitional period had already ended.

When the transitional period ended, member state by member state

Member states notified their chosen duration to the Commission and ESMA, and ESMA published the resulting list. The durations run from 30 December 2024. The table below shows the notified duration and the resulting end date, with the eighteen month figure capped at the 1 July 2026 date set in the regulation itself.

What ESMA expects now

In its Statement on the End of Transitional Periods under MiCA (ESMA75-113276571-1679, 17 April 2026), ESMA confirmed that the transitional period would expire across the EU on 1 July 2026, and that after that date any entity providing crypto-asset services to EU clients without a MiCA licence is in breach of EU law and must cease offering such services. The statement applies irrespective of whether MiCA has been implemented in a given member state.

The statement sets out three sets of expectations, and each carries a practical consequence.

On wind-down

ESMA expects wind-down plans to enable an orderly exit without causing undue economic harm to clients, including by arranging the offboarding of clients and the transfer of crypto-assets held on their behalf to an authorised provider or to a self-hosted wallet. Clients should receive prior notice. Plans are expected to be operational, credible and immediately executable, and designed in accordance with all relevant conduct, prudential and AML obligations. By 1 July 2026, any unauthorised provider was expected to have implemented its plan.

On client migration

Authorised providers were expected to actively manage the migration of existing clients ahead of the deadline, and to onboard them before the end of the transitional period, applying robust onboarding processes that meet AML requirements in full. Migration was not treated as an administrative transfer.

On third-country entities

ESMA reminded market participants that entities established outside the EU may not, outside the narrow reverse solicitation exception, provide crypto-asset services qualifying as MiCA services to EU investors or solicit EU clients. It stated explicitly that this applies in a business to business context, because MiCA prohibits authorised providers from outsourcing or delegating custody to entities not themselves authorised as providers. Outsourcing and delegation arrangements must not result in services reaching EU clients through unauthorised third-country entities.

That last point closes the structure many groups had assumed would work: an authorised EU entity holding the licence, with the substantive service delivered from an affiliated non-EU company. ESMA has said that arrangement does not comply.

Three positions a business can now be in

National competent authorities have been asked to verify the existence and adequacy of wind-down plans, to take action against unauthorised provision in cooperation with other authorities, and to scrutinise client migration strategies to ensure unauthorised providers, including unauthorised group entities, do not continue business as usual beyond the transitional period.

Routes back into the EU market

A business that lost its position is not permanently excluded. It is, however, now an ordinary applicant with no transitional protection, which changes the sequence rather than the destination.

Step 1. Establish the legal position accurately

Whether the business was lawfully providing services before 30 December 2024, which member state regime applied, when that window closed, and whether any application cut-off was missed. This determines whether the exposure is a lapsed transition or unauthorised provision from the outset, which are materially different problems.

Step 2. Complete the wind-down properly

Continued service while an application is prepared is the exposure most likely to prejudice the application itself. National competent authorities assessing an applicant will consider whether it has been subject to supervisory measures or has infringed MiCA or other EU law, and unauthorised provision after the window closed is exactly that.

Step 3. Select the authorising member state deliberately

Passporting means market access is the same wherever authorisation is obtained, so the choice turns on supervisory approach, realistic timelines, local substance expectations and the classes of service required. This is a structuring decision, not an administrative one.

Step 4. Size capital to the class and to overheads

Minimum own funds are EUR 50,000 for Class 1, EUR 125,000 for Class 2 and EUR 150,000 for Class 3. The ongoing requirement is the higher of the class floor or one quarter of the preceding year's fixed overheads, so a business with substantial operating costs will hold more than the headline figure.

Step 5. File and manage the assessment

The procedure runs as a completeness check followed by a substantive assessment. In Latvia, Latvijas Banka applies a 25 working day completeness check and then a 40 working day decision period. Incomplete filings restart the clock rather than shorten the assessment, so the quality of the initial submission largely determines the timeline.

The requirement most applicants still miss

Authorisation under MiCA is not always sufficient on its own. Custody and administration of e-money tokens, and transfers of e-money tokens on behalf of clients, are treated as payment services under PSD2. The European Banking Authority set out this position in its No Action letter of 10 June 2025 and allowed a transition that ended on 2 March 2026.

Since that date, a provider carrying out those activities needs its own payment institution or electronic money institution authorisation, or a partnership with an authorised payment service provider. The prudential requirements apply cumulatively, with no mutualisation between the MiCA and PSD2 frameworks, so a Class 2 provider holding EUR 125,000 under MiCA does not satisfy its PSD2 requirement with the same capital.

Any business whose model involves stablecoins should treat this as a second authorisation question rather than a detail of the first.

Frequently asked questions

When did the MiCA transitional period end?

The MiCA transitional period expired across the EU on 1 July 2026. Individual member states were permitted to shorten it and many did. The earliest windows closed on 30 June 2025 in Latvia, Hungary, the Netherlands, Poland, Slovenia and Finland.

What is MiCA grandfathering?

Article 143(3) of MiCA allowed crypto-asset service providers operating in accordance with applicable national law before 30 December 2024 to continue doing so until 1 July 2026, or until they were granted or refused authorisation under Article 63, whichever came sooner.

Can the MiCA deadline be extended?

No. The regulation contains no extension mechanism. ESMA confirmed in its statement of 17 April 2026 that the transitional period would expire on 1 July 2026, and that any entity providing crypto-asset services to EU clients without a MiCA licence after that date is in breach of EU law.

What happens to a crypto business that missed the deadline?

It must cease providing crypto-asset services to EU clients and implement an orderly wind-down, offboarding clients and arranging transfer of their crypto-assets to an authorised provider or a self-hosted wallet. It may then apply for authorisation under Article 63 as an ordinary applicant.

Does reverse solicitation allow non-EU firms to serve EU clients?

Only within a narrow exception. ESMA has reminded market participants that entities established outside the EU may not provide MiCA services to EU investors or solicit EU clients, and has confirmed this applies in a business to business context as well as to retail.

Which member states had the shortest transitional periods?

Six adopted the minimum six month period ending 30 June 2025: Latvia, Hungary, the Netherlands, Poland, Slovenia and Finland. Sweden adopted nine months. Germany, Ireland, Lithuania, Austria, Slovakia and Norway adopted twelve months, ending 30 December 2025.

How long does MiCA Article 63 authorisation take?‍

The procedure runs as a completeness check followed by a substantive assessment. In Latvia, Latvijas Banka applies a 25 working day completeness check and then a 40 working day decision period. Incomplete submissions restart the completeness clock rather than shortening the assessment.

What capital does a CASP need under MiCA?

Minimum own funds are EUR 50,000 for Class 1, EUR 125,000 for Class 2 and EUR 150,000 for Class 3. The ongoing requirement is the higher of that class floor or one quarter of the preceding year's fixed overheads, so operating costs can raise the figure above the minimum.

Is a CASP authorisation enough for stablecoin activity?

Not always. Custody and administration of e-money tokens and transfers of e-money tokens on behalf of clients are treated as payment services. Since 2 March 2026 those activities require payment institution or electronic money institution authorisation, or a partnership with an authorised provider.

Can an authorised CASP passport across the EU?

Yes. Authorisation under Article 63 in one member state permits provision of the authorised services across the Union. This is why the choice of authorising member state affects supervisory relationship, timeline and local substance expectations rather than the extent of market access.

Key resources

Disclaimer

This article is for informational purposes only and does not constitute legal or regulatory advice. Regulatory requirements are subject to change. Consult a qualified advisor before making structural or compliance decisions.

DM Strategy advises fintech and crypto founders on structure, licensing, and banking as one interconnected decision. To discuss MiCA authorisation or a return to the EU market after the transitional period, book an introductory call at dmstrategy.io.

‍