Briefing
The European Banking Authority (EBA) has issued guidance confirming that the custody and transfer of e-money tokens (EMTs), a core stablecoin activity under the Markets in Crypto-Assets (MiCA) regulation, concurrently constitutes a payment service under the Payment Services Directive (PSD2). This interpretation fundamentally alters the European compliance architecture, requiring firms to secure both a MiCA Crypto Asset Service Provider (CASP) license and a PSD2 Payment Institution license for the same business function, thereby creating a structural redundancy in the regulatory framework. The most critical operational detail is the effective deadline of March 2, 2026, after which the EBA’s transitional “no action” period will expire, mandating the full dual-licensing compliance.
Context
Prior to this EBA clarification, the industry operated under the assumption that MiCA, as the comprehensive, bespoke framework for digital assets, would supersede or harmonize with existing financial services legislation for activities it specifically defined, such as the issuance and servicing of EMTs. The prevailing compliance challenge centered on preparing for MiCA’s unified “passporting” system, which was intended to allow a single license to operate across the entire European Economic Area. The ambiguity lay in the precise boundary where a crypto-asset service (MiCA) ceased and a traditional payment service (PSD2) began, an uncertainty that has now been resolved in favor of overlapping jurisdiction.
Analysis
The EBA’s decision significantly impacts a firm’s financial and operational compliance frameworks by mandating the integration of two distinct regulatory regimes. The primary consequence is the duplication of minimum capital requirements, forcing stablecoin issuers to hold combined reserves that can exceed €250,000 for a single activity, substantially raising the barrier to entry. This dual mandate requires firms to manage two separate sets of reporting, governance, and audit standards, directly increasing operational expenditure and complexity. The chain of effect is clear → higher compliance costs will constrain profit margins and may prompt some firms to reduce their service offerings or exit the EU market entirely, particularly impacting the competitiveness of euro-pegged stablecoins.
Parameters
- Dual Licensing Mandate → MiCA CASP License and PSD2 Payment Institution License are both required for EMT custody and transfer activities.
- Compliance Deadline → March 2, 2026, marks the end of the EBA’s transitional “no action” period.
- Minimum Capital Requirement → Combined capital requirements for dual licensing can exceed €250,000 for a single entity.
- Affected Asset Class → E-Money Tokens (EMTs), which primarily include fiat-backed stablecoins like euro-pegged assets.
Outlook
The immediate strategic focus shifts to industry advocacy for legislative correction, likely via amendments to the forthcoming PSD3 or a targeted revision of MiCA’s Level 2 measures. The current EBA guidance sets a strong precedent for regulatory agencies to interpret new digital asset laws as additive to, rather than substitutive of, existing financial services directives. This conservative approach will likely slow the growth of euro-denominated stablecoins and could incentivize global issuers to prioritize jurisdictions with more streamlined, unified regulatory frameworks. Future legal action may center on challenging the proportionality of this dual-licensing requirement under EU law.
