1 July 2026 as the Starting Point

The End of Grandfathering – A Market in Flux

1 July 2026 is a key date for the European crypto-asset market: this is when the grandfathering period for crypto-asset service providers (CASPs) comes to an end. In a recent article, we outlined what the end of grandfathering means for CASPs not (yet) authorised under MiCAR and what options are available to them. This article is now aimed at a specific group that has often been overlooked in the discussion so far: representatives of Swiss banks.

For these institutions, 1 July 2026 is not a risk – but a strategic starting signal.

What the End of Grandfathering Means

The Markets in Crypto-Assets Regulation (MiCAR) sets out uniform requirements across Europe for crypto-asset service providers (CASPs). These providers require authorisation from a national competent authority (NCA) in order to provide their services in compliance with the law.

Article 143(3) of MiCAR clarifies that CASPs which provided their services in accordance with applicable law prior to 30 December 2024 may continue to do so until 1 July 2026 or until the date on which they receive authorisation or a refusal under MiCAR, whichever occurs first. In any case, the grandfathering period will therefore end across the EU on 1 July 2026.

In order to be permitted to actively offer crypto-asset services in the EU beyond 1 July 2026, CASPs must therefore obtain authorisation under MiCAR.

The implication is clear: the NCAs will step up their cooperation in identifying unauthorised crypto-asset services and taking action against unauthorised CASPs – in this context, critical scrutiny is also likely to be directed at market participants from third countries who (allegedly) base their service offerings in the EU on the principle of the passive freedom to provide services (reverse solicitation).

For Swiss banks wishing to provide crypto-asset services to German customers, reverse solicitation is therefore no longer a viable basis for a long-term business model. Unauthorised CASPs (and individuals acting on their behalf) face significant risks of sanctions: for example, under German law, the unauthorised provision of crypto-asset services constitutes an administrative offence that constitutes an administrative offence that may result in a substantial fine for the CASP. Furthermore, natural persons acting on behalf of the CASP may even be liable to criminal prosecution. Finally, Bafin may publish a warning on its website about a CASP offering crypto-asset services without authorisation (so-called "naming and shaming"). Such a warning may in turn stand in the way of obtaining a MiCAR authorisation in another Member State.

The German Market: Large, Regulated and Currently in a State of Upheaval

Germany is one of Europe's most significant financial markets. Demand for crypto-asset services from institutional investors, family offices and high-net-worth private clients is growing noticeably. In practice, three key areas of demand have emerged that are particularly relevant for the service offering of a Swiss bank with a German foothold:

Trading and custody of crypto-assets for retail and corporate clients. Bitcoin and other crypto-assets have found their way into the investment portfolios of a growing number of clients – both private investors and corporates looking to access crypto-assets as an asset class. The need for regulated, bank-backed custody and the ability to process buy and sell orders through a trusted bank is substantial. In this context, many clients explicitly value the institutional framework of a bank over the offering of a pure crypto-exchange provider.

Stablecoins for corporate treasury management. For corporates, stablecoins – in particular fully backed e-money tokens within the meaning of MiCAR – are gaining importance as an instrument for short-term liquidity management. The ability to hold and transfer liquidity in stablecoins around the clock, without banking business days and value date lags, opens up entirely new efficiency gains for treasury teams. A bank that can serve this need with a MiCAR-compliant infrastructure offers its corporate clients genuine added value compared to a traditional bank account.

Exchanging stablecoins for yield-bearing tokenised instruments. The market for tokenised real-world assets (RWAs) – and in particular tokenised money market funds (tMMFs) – is growing rapidly. For corporate clients holding stablecoin positions, the seamless exchange into yield-bearing instruments such as tMMFs is a natural next step: the liquidity remains available on-chain whilst simultaneously generating a market-rate return. This use case connects crypto-asset services within the meaning of MiCAR with the regulated world of tokenised funds – and is therefore a prime example of the kind of integrated service offering that a regulated bank is best placed to provide.

1 July 2026 has had a "wake-up call" effect on the European crypto market. Numerous providers who were previously tolerated are now exiting the market or significantly restricting their services. This creates space for institutions with a sound regulatory footing. As the EU map of authorised CASPs shows, by the end of June 2026 a not inconsiderable number of market participants had already obtained authorisation under MiCAR. As of 1 July 2026, there were already 278 authorised CASPs across the EU. 57 alone in Germany. Competition is taking shape – those who wait too long will find a more regulated and crowded market.

The Key Often Lies Within the Organisation Itself: The German Banking Subsidiary

Many Swiss banks already operate their own subsidiary bank in Germany or a credit institution authorised under the CRD. This institution is subject to supervision by Bafin and the Deutsche Bundesbank and is fully integrated into the European banking regulatory framework.

This is precisely where Article 60 of MiCAR comes into play – opening up a fast, pragmatic route into the German crypto-asset market.

Article 60 of MiCAR: The Notification Procedure for Credit Institutions

Article 60 of MiCAR establishes a preferential procedure for credit institutions already authorised under the CRD: they do not need to apply for full CASP authorisation under Article 59 of MiCAR, but may commence providing crypto-asset services by means of a simple notification to their competent supervisory authority – in Germany, Bafin.

The procedure works as follows: the credit institution notifies Bafin, at least 40 working days before commencing the crypto-asset services, of the services it intends to provide. Bafin checks that the notification is complete and may raise any concerns. If it raises no objection within the deadline, the institution may commence providing the services.

The notification procedure is therefore significantly faster than a full authorisation procedure under Article 59 of MiCAR – provided that the documentation is complete and the operational infrastructure is in place. For the use cases described above, this means in practice:

• The safekeeping and administration of crypto-assets for retail and corporate clients is one of the crypto-asset services defined in Article 3(1)(16) of MiCAR that can be taken up via the notification procedure.
• The execution of orders on behalf of clients – i.e. the purchase and sale of Bitcoin and other crypto-assets – is equally covered.
• The transfer of crypto-assets on client instruction, which is indispensable for stablecoin-based treasury management, also falls within the catalogue of notifiable services.
• The exchange of crypto-assets for other crypto-assets – including the exchange of stablecoins for tMMF tokens – may fall under the service of exchanging crypto-assets for other crypto-assets within the meaning of MiCAR and is likewise notifiable.

What Must Be Notified? The Checklist at a Glance

The following table provides an overview of the key elements that a notification under Article 60 of MiCAR typically must include:

Why Now – and Why Germany?

Firstly: A market gap created by the end of the grandfathering period. With the grandfathering period due to expire on 1 July 2026, ESMA expects CASPs that are not (yet) authorised to take immediate action to wind down their activities in the EU in an orderly manner, whilst safeguarding their customers' interests and minimising risks to market integrity. In practical terms, this means that competitors are leaving the market. This opens up an opportunity for well-positioned institutions.

Secondly: The EU passport as a multiplier. A right to provide crypto-asset services in Germany through an existing banking subsidiary and the notification procedure under Article 60 MiCAR may, in principle, also enable the cross-border provision of such services in other EU Member States under the passporting procedure pursuant to Article 65 MiCAR. The effort involved in the initial notification therefore has the potential to pay off across the entire European Economic Area.

Thirdly: Institutional demand is growing – and becoming more complex. Demand is no longer limited to straightforward Bitcoin custody. The convergence of crypto-assets, stablecoins and tokenised capital market instruments is creating a spectrum of services that can only be meaningfully provided by regulated institutions with access to traditional financial infrastructure. This is precisely where a bank holds a natural competitive advantage.

Fourthly: A time advantage over the full authorisation procedure. A full CASP authorisation procedure under Article 59 of MiCAR requires considerable lead time. The notification procedure under Article 60 of MiCAR for an already authorised credit institution is significantly shorter – provided the documentation is complete from the outset. As ESMA has emphasised, NCAs should treat "last-minute" applications for authorisation with caution and apply the same scrutiny to them as they would to any other application. This underlines that the quality of preparation is crucial.

Prerequisites for a Successful Market Entry

Entering the German crypto-asset market via Article 60 of MiCAR is not an administrative formality – it requires careful preparation across several dimensions.

First and foremost, a clear strategic decision is needed as to which crypto-asset services are actually to be provided. The use cases described above – Bitcoin custody and trading, stablecoin treasury management and tMMF exchange – each have different operational, technical and compliance-related requirement profiles. A precise definition of the service scope is the foundation of any robust notification.

A gap analysis of the existing infrastructure of the German bank is then indispensable: does the institution have the necessary IT infrastructure for on-chain transactions? Are the AML/CFT processes aligned with the specific characteristics of blockchain transactions and the Travel Rule? Are the internal control systems sufficiently calibrated for the specific risks associated with crypto-assets – market risk, custody risk and smart contract risk?

Early informal engagement with Bafin is not an optional add-on but a tried-and-tested component of an efficient process. The supervisory authority has demonstrated in the past that it welcomes constructive preliminary discussions – in particular for novel business models such as the exchange of stablecoins for tMMF tokens, where the regulatory classification has not yet been definitively resolved in all cases.

Finally, the interfaces between MiCAR and other regulatory frameworks should not be underestimated: DORA for digital operational resilience, the Regulation on information accompanying transfers of funds for the Travel Rule, MiFID II for the question of the boundary with financial instruments in the context of tokenised funds – all of these regulatory regimes need to be aligned with one another before the notification is submitted.

Conclusion: The Window Is Open – But It Is Closing

1 July 2026 has had a "wake-up call" effect on the European crypto market. Those who act now will benefit from a market that is currently re-organising itself – and from a regulatory framework that enables already authorised credit institutions to access the market far more efficiently than any other provider.

For Swiss banks with a German banking subsidiary, the starting position is particularly favourable: the regulatory foundations are in place, and the supervisory relationship with Bafin already exists. The crypto-asset market is not waiting – and the use cases for Bitcoin custody, stablecoin treasury management and tokenised fund products are real and in demand today. The priority is now to define and implement the appropriate market-entry approach.

If you have any questions regarding the notification procedure under Article 60 of MiCAR, the regulatory classification of specific crypto-asset use cases, or the preparation of a notification to Bafin, please do not hesitate to contact us.

This article builds on our previous article "The End of Grandfathering under MiCAR" and does not constitute legal advice. It is not a substitute for advice tailored to individual cases.