Briefing
The European Banking Authority (EBA) has confirmed a critical regulatory overlap, clarifying that Crypto-Asset Service Providers (CASPs) managing E-Money Tokens (EMTs), commonly known as euro-pegged stablecoins, must comply with both the Markets in Crypto-Assets (MiCA) regulation and the Payment Services Directive (PSD2). This interpretation, detailed in a June 2025 No Action Letter, means that activities such as the custody and transfer of EMTs constitute a payment service, necessitating a separate payment institution license in addition to the MiCA authorization. The primary consequence is the immediate introduction of regulatory duplication and substantially increased capital and operational compliance costs for stablecoin issuers across the EU, with the enforcement transition period set to expire on March 2, 2026.
Context
Prior to this EBA clarification, the prevailing industry assumption was that MiCA, as the first comprehensive, bespoke digital asset framework, would supersede or harmonize with existing financial services legislation for its regulated activities. The industry invested heavily in MiCA compliance, expecting a unified, passportable license would cover all core stablecoin operations, including issuance, custody, and transfer. This ambiguity centered on whether MiCA’s explicit regulation of EMTs fully incorporated the functional requirements of payment services, or if the older, broader PSD2 framework maintained concurrent jurisdiction over the transfer and custody functions. This legal uncertainty created a significant strategic risk regarding long-term operational scaling within the European Economic Area.
Analysis
The EBA’s ruling fundamentally alters the compliance architecture for EU stablecoin firms by requiring the integration of two distinct and complex regulatory frameworks. Regulated entities must now develop and maintain dual compliance systems, which directly impacts capital allocation by effectively doubling the regulatory capital required for a single business line. This duplication forces a comprehensive review of operational controls, especially concerning client fund segregation and transaction monitoring, to satisfy both MiCA’s crypto-specific requirements and PSD2’s stringent payment service standards. The resultant increase in compliance overhead threatens to undermine the competitiveness of euro-denominated stablecoins and could lead to market consolidation or an exit by smaller firms.
Parameters
- Dual Licensing Mandate → MiCA (Crypto-Asset Service Provider) and PSD2 (Payment Institution) licenses are both required for EMT custody and transfer activities.
- Transition Deadline → March 2, 2026, marks the end of the EBA’s non-enforcement period, after which dual licensing is expected to be mandatory.
- Affected Assets → E-Money Tokens (EMTs), primarily stablecoins pegged to official currencies like the Euro.
- Core Conflict → Custody and transfer of EMTs are classified as a payment service under PSD2, creating regulatory overlap with MiCA.
Outlook
The immediate strategic focus for affected firms is to initiate the PSD2 licensing process while simultaneously advocating for legislative intervention, likely through amendments to the upcoming PSD3 or MiCA itself, to restore regulatory proportionality. Absent a political fix, the dual-licensing requirement will set a high barrier to entry, potentially stifling the growth of euro stablecoins and favoring established financial institutions that already possess payment licenses. This action establishes a precedent for how global regulators may interpret bespoke crypto laws against legacy financial directives, signaling that a new, crypto-specific license does not automatically grant exemption from existing financial service laws.
