MiCA Grandfathering Period: Cross-Border Crypto Services and the Reality of EU Fragmentation

Published on modernipravnik.cz | August 13, 2025

The Markets in Crypto-Assets (MiCA) Regulation has fundamentally transformed the European cryptocurrency landscape since its full application on January 1, 2025. However, the transitional provisions under Article 143(3) have created a complex patchwork of national implementations that severely limits cross-border crypto asset exchange services during the grandfathering period. This analysis examines the practical implications for crypto-asset service providers (CASPs) seeking to operate across EU member states during this transitional phase.

Can you provide services in other EU country in grandfathering period? Yes, if all following criteria are met:

ESMA has clarified that cross-border activities during grandfathering are only permissible where:

 1. Home state national law permits the entity to provide services abroad (usually at least MiCA application submission needed),

 2. Host state national law allows foreign entities to provide crypto services on its teritory, and

 3. Both jurisdictions maintain active grandfathering or alternative authorization frameworks.

Clear way: The way for cross boarder service provision is opened after receiving the licence and passportization in target country.

Understanding Article 143(3): The Grandfathering Provision

Article 143(3) of MiCA allows crypto-asset service providers who were providing services in compliance with applicable law before December 30, 2024, to continue their operations until July 1, 2026, or until the granting or refusal of authorization under Article 63, whichever occurs first. This provision appears to offer a grace period for existing operators to adapt to the new regulatory framework.

However, the regulation also grants member states significant discretion: “Member States may decide not to apply this transitional regime or to shorten its duration if they consider their national regulatory framework to be less stringent than this Regulation.”

The Fragmentation Reality: 27 Different Approaches

The European Securities and Markets Authority (ESMA) has documented substantial fragmentation across EU member states in their approach to grandfathering periods:

18-Month Grandfathering Period (12 countries)

• Countries: Czech Republic, France, Malta, Luxembourg, Estonia, Croatia, Italy, Cyprus, Romania, Bulgaria, Denmark, Iceland
• Cross-border potential: Highest likelihood for bilateral arrangements due to extended periods
• Special conditions: Various application deadlines (Czech Republic: July 31, 2025; Bulgaria: October 8, 2025; Denmark: December 30, 2024)

12-Month Grandfathering Period (9 countries)

• Countries: Germany, Austria, Ireland, Spain, Lithuania, Greece, Slovakia, Liechtenstein, Norway
• Cross-border potential: Moderate likelihood, especially with other 12-month countries
• Special conditions: Germany and Austria have shortened periods until December 31, 2025, with simplified procedures for certain entities

6-Month Grandfathering Period (6 countries)

• Countries: Netherlands, Poland, Latvia, Hungary, Slovenia, Finland (already lapsed and under grandfathering period these are no go jurisdictions)
• Cross-border potential: Very limited due to shorter periods
• Special conditions: Netherlands period until June 30, 2025, with strict enforcement after deadline

No Grandfathering/TBA (2 countries)

• Countries: Belgium, Portugal
• Status: Belgium has no registered VASPs with political decision pending; Portugal lacks implementing legislation

See here official ESMA statement:
1) Grandfathering period and cross boarder crypto service provision:

2) List of countries and their grandfathering periods:

-Bulgaria: June 24, 2026
–Czech Republic: June 24, 2026
-Denmark: June 24, 2026
-Estonia: June 24, 2026
-France: June 24, 2026
-Croatia: June 24, 2026
-Italy: June 24, 2026
-Cyprus: June 24, 2026
-Luxembourg: June 24, 2026
-Malta: June 24, 2026
-Romania: June 24, 2026
-Iceland (EEA): June 24, 2026
-Germany: December 26, 2025
-Ireland: December 26, 2025
-Greece: December 26, 2025
-Spain: December 26, 2025
-Lithuania: December 26, 2025
-Austria: December 26, 2025
-Slovakia: December 26, 2025
-Liechtenstein (EEA): December 26, 2025
-Norway (EEA): December 26, 2025
-Sweden: September 27, 2025
-Latvia: June 29, 2025
-Hungary: June 29, 2025
-Netherlands: June 29, 2025
-Poland: June 29, 2025
-Slovenia: June 29, 2025
-Finland: June 29, 2025

The Critical Limitation: No EU Passport During Grandfathering

ESMA’s official guidance has definitively clarified that grandfathered entities cannot utilize MiCA’s EU passport mechanism. This represents the most significant limitation on cross-border services during the transitional period.

ESMA Q&A 2086 Clarifications

Question 1: Can grandfathered entities passport their crypto services to other member states?
ESMA Answer: NO. Grandfathered entities do not benefit from an EU passport unless they obtain MiCA authorization and thereby cease to be “grandfathered” entities.

Question 2: Can a grandfathered entity from one state provide cross-border services in a state that has not allowed grandfathering?
ESMA Answer: NO. Grandfathered entities are prohibited from providing cross-border services in states where grandfathering does not apply.

ESMA Statement of December 17, 2024

ESMA further clarified: “Different transitional periods should be taken into account by CASPs providing services in more than one Member State… a CASP seeking MiCA authorization in Member State A with a 12-month transitional period while also serving clients in Member State B with a 6-month period should ensure compliance with applicable law of Member State B.”

Cross-Border Services: The Bilateral Requirement

The absence of harmonized cross-border rules during the grandfathering period means that any cross-border crypto asset exchange services require bilateral compliance. ESMA confirmed: “Cross-border activities by an entity benefiting from grandfathering may occur only if the entity complies with relevant legislation applicable in both – home and host Member States.”

Key Requirements for Cross-Border Operations

1. Dual Compliance: Must satisfy both home state grandfathering requirements and host state national law
2. Active Grandfathering Periods: Both jurisdictions must maintain active grandfathering or alternative authorization frameworks
3. National Discretion: Each member state determines its own cross-border policies during transition
4. AMLD5 Basis: Cross-border permissions rely on pre-existing anti-money laundering frameworks, not harmonized EU crypto rules

The Reality: No Official Bilateral Agreements

Extensive analysis reveals that no EU member state has officially confirmed bilateral recognition of Czech grandfathered entities. This absence stems from several factors:

• No harmonized framework: ESMA explicitly confirmed that “Anti-Money Laundering framework (AMLD5) does not offer a harmonized passporting regime”
• Fragmented national approaches: Each member state maintains distinct national rules for cross-border crypto services
• Lack of coordination: No formal bilateral agreements exist between member states regarding mutual recognition of grandfathered CASP entities

Case Study: Czech Republic’s Position

A Czech entity with a grandfathering application submitted to the Czech National Bank (CNB) before July 31, 2025, faces significant limitations in cross-border expansion:

Domestic Rights

✅ Right to continue operations in Czech Republic until July 1, 2026, or license decision
✅ Protection under 18-month grandfathering period
✅ Recognition by CNB of submitted application

Cross-Border Limitations

❌ NO automatic right to provide services in other member states
❌ NO EU passport during grandfathering period
❌ NO bilateral recognition by other member states without individual compliance assessment

Practical Analysis: Austria and Norway

Austria (EU Member State)

• Implementation: Active since December 30, 2024
• Grandfathering: 12 months (until December 31, 2025) – SHORTENED
• Cross-border requirements:
• FMA registration as VASP under FM-GwG required
• No automatic recognition of Czech grandfathering application
• High compliance standards with strict Austrian regulation

Norway (EEA State)

• Implementation: Expected from July 1, 2025
• Grandfathering: 12 months (until July 1, 2026)
• Cross-border requirements:
• Finanstilsynet (FSA) registration as VASP required
• Compliance with Norwegian AML Act and TFR II
• Local presence requirements for certain activities

Market Targeting: The Geographical Limitation Defense

For entities seeking to avoid cross-border compliance obligations, careful attention to market targeting criteria becomes crucial:

Factors Indicating Market Targeting

• Language versions: Website content and marketing materials in local language
• Local presence: Virtual or physical branches, local addresses, phone numbers
• Payment methods: Local payment options (EUR, local banking systems)
• Advertising: Local media campaigns, geo-targeted ads, local SEO optimization

Defensive Strategies

• Single language websites (Czech only) with .cz domain
• Czech payment methods and CZK pricing only
• Geoblocking: Technical blocking of access from foreign IP addresses
• Terms of service: Explicit limitation to Czech residents only
• No local marketing: Absence of foreign language advertising or local campaigns

Implementation Status and Regulatory Risks

Countries with Implementation Delays

• Not fully implemented (4 countries): Italy, Luxembourg, Poland, Romania
• Not implemented (2 countries): Belgium, Portugal

These delays create regulatory uncertainty for cross-border services, as entities cannot rely on unclear legal frameworks.

Enforcement Risks

• Regulatory sanctions: Providing unlicensed services abroad can result in fines up to €20 million or 5% of annual turnover
• Legal uncertainty: Different interpretations by national regulators regarding territorial scope
• Reputational risks: Compliance issues may jeopardize MiCA license applications

Strategic Recommendations

Conservative Approach

1. Limit services exclusively to domestic market until full MiCA authorization
2. Focus resources on MiCA license application to obtain EU passport rights
3. Avoid cross-border activities during grandfathering period due to legal uncertainty

If Cross-Border Expansion is Essential

1. Individual legal analysis for each target country required
2. Direct consultation with host state regulators
3. Local legal opinions from specialized crypto law practitioners in each jurisdiction
4. Comprehensive compliance assessment under both home and host state laws

Market Targeting Mitigation

1. Implement robust geoblocking measures
2. Maintain single-language websites and marketing materials
3. Document defensive measures for regulatory compliance
4. Regular compliance audits to ensure territorial limitation effectiveness

The Path Forward: From Grandfathering to EU Passport

The analysis clearly demonstrates that the grandfathering period creates a legally fragmented environment rather than a harmonized transition. The most viable path for legitimate cross-border crypto asset exchange services remains obtaining full MiCA authorization, which provides:

• Article 65 passporting rights: Automatic access to all EU/EEA markets
• Regulatory certainty: Clear legal framework for cross-border operations
• Competitive advantage: Market access unavailable to grandfathered competitors
• Future-proof compliance: Alignment with permanent regulatory framework

Conclusion

The MiCA grandfathering period represents a complex regulatory transition that severely limits cross-border crypto asset exchange services. Despite Article 143(3)’s EU-wide application, the absence of harmonized cross-border rules and the prohibition on EU passport usage creates a fragmented landscape of 27 different national approaches.

Key takeaways for practitioners:

1. Grandfathering ≠ EU passport: No automatic cross-border rights during transitional period
2. Bilateral compliance required: Each cross-border relationship requires individual legal assessment
3. No official bilateral agreements: Member states have not formally recognized each other’s grandfathered entities
4. High regulatory risk: Cross-border services without proper authorization face significant sanctions
5. Strategic focus recommended: Prioritize full MiCA authorization for legitimate EU-wide market access

The regulatory landscape will continue evolving as member states complete their MiCA implementations and ESMA provides additional guidance. However, the fundamental limitation remains: true cross-border crypto asset services in the EU require full MiCA authorization and EU passport rights, not grandfathering protection.

For crypto-asset service providers navigating this transition, the safest and most strategic approach is to focus on domestic operations during the grandfathering period while preparing for full MiCA compliance to unlock genuine EU-wide market access through legitimate regulatory channels.

Keywords:
#MiCAgrandfathering, Article 143(3), #crypto-asset_services, #cross-border crypto, #EUcryptopassport, #CASPcompliance, #transitional_regime, #bilateral_recognition, #AMLD5, #MiCA_compliance, #EU_crypto regulation, #crypto_licensing, #crypto_national_implementations, #market_targeting, #MiCA_passporting.

---

This analysis is based on publicly available regulatory guidance and legal sources as of August 13, 2025. Regulatory landscapes continue evolving, and specific legal advice should be sought for individual circumstances.

Author: Mgr. Petr Uklein, head attorney at law