"No, not all applications can be processed by 30 December". The Luxembourg Financial Sector Supervisory Commission (CSSF) has confirmed feedback from the field: in Luxembourg, applicants for the European crypto passport will be processed by July 2026 at the latest. In the meantime, players registered as virtual asset service providers (VASPs) can continue to provide crypto services locally under the "grandfather clause".
When the time comes, the passport will allow the providers concerned to offer their services throughout the EU without restriction. That’s a key element for the European crypto industry, according to one of the 12 Luxembourg-registered VASPs, liquidity provider B2C2. "Whereas previously a company needed 27 different local licences to operate effectively, but not efficiently, across the EU, passporting simplifies these requirements and opens up bridges between traditional finance and existing crypto players," stated its head of Luxembourg, .
Palpable frustration
The framework is set by the new European Markets in Crypto-Assets Regulation (Mica), which is due to apply in full on 30 December. From custody to exchange to management of crypto shares, Mica sets binding standards for market participants, in order to strengthen consumer protection and financial stability. It applies primarily to token issuers and crypto asset service providers (CASPs), affecting both traditional institutions and crypto players.
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Not all VASPs aspire to obtain a CASP passport, synonymous with stricter obligations in terms of governance, IT security, market abuse and conflicts of interest. Among those who have taken this route, the frustration is palpable: some initially hoped to be able to benefit from their passport from 1 January 2025. They have expressed surprise at the absence of a formal procedure for obtaining the CASP licence - in favour of more informal exchanges which, they felt, could benefit companies with privileged relations with the regulator.
Regulatory licensing processes always require considerable preparation and patience
“Regulatory licensing processes always require considerable preparation and patience, and the CASP licensing process is no different,” said Walters. The CSSF, he pointed out, “is in a precarious position.” The Luxemburg regulator does not have a completely free hand because the European rulemakers have been slow to formalise all the technical standards. “A number of second and third level regulations that support and underpin Mica are still being published and finalised.”
“Fortunately, the CSSF implemented a well-established VASP framework with comprehensive obligations regarding customer due diligence, transaction monitoring and reporting alongside governance, outsourcing and operational requirements that apply to the financial service sector in Luxembourg,” Walters stated. “In addition, the CSSF has proactively engaged with firms that aspire to obtain a CASP licence through industry round events and face-to-face meetings.”
“This will make the transition to Mica smoother for VASPs here,” Walters commented. As for the deadline of 1 July 2026 for obtaining a CASP authorisation, this “is a longer time period to prepare than some other EU countries.”
We are working to obtain the MiCA licence as quickly as possible.
The other Luxembourg VASPs who agreed to speak on the record were likewise forgiving when are speaking about the local financial regulator. “We are working very closely with the CSSF towards obtaining the Mica license at the earliest timeline possible,” stated , CEO of Bitflyer Europe. “The CSSF communicated their commitment towards a smooth Mica application process while [preserving] market integrity.”
“It does not astonish me at all," said , co-founder of the fintech startup Stokr, on learning of the delay in processing applications. “As for our company and all other VASPs this does also not pose a specific problem as transitory provisions are applicable. The license requirement kicks only in from 1 July 2026. Passporting is indeed desirable but there are no level 2 measures on the cross-border service provision yet available.”
CSSF ‘proactive engaged’
"The CSSF has already received a number of applications which are at more or less advanced stages, from entities which will fall within the scope of Mica", the regulator said in a statement. “The market seems to be well prepared for the full entry into force of Mica.”
The CSSF pointed out that it "has followed the development of the regulation and has proactively engaged in dialogue with players currently registered as VASPs, in order to understand their plans under Mica. The CSSF published a press release in February 2024 calling on entities planning to carry out an activity likely to fall within the scope of Mica to contact the CSSF for preliminary discussions".
In July 2024, the CSSF published a questionnaire drawn up by the European Securities and Markets Authority to gauge the appetite of financial entities for the cryptoassets regime. In parallel with these initiatives, the CSSF has taken internal measures to prepare for the processing of authorisation applications and the supervision of activities falling under Mica, and has also strengthened the skills of its staff in this area".
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For technology lawyer , the impression that the CSSF is not ready is unjustified. She pointed out that preparing the application involves a huge amount of work, both for the aspiring CASP and for the supervisory authority. "The speed of the process depends largely on the quality of the application file that was submitted. A complete and well-structured application will enable the CSSF to process it more quickly. We should see the first licences granted in the next six months, probably first to the larger institutions which are generally better prepared - because they have the resources to do so."
Read the French-language version of this news report /
Read more of Nadia Manzari’s Mica analysis in the January 2025 print edition of Paperjam magazine, on newsstands 11 December 2024.