PSD2 and MiCA
In a much-anticipated opinion, the European Banking Authority (EBA) has addressed one of the most pressing regulatory questions facing crypto-asset service providers (CASPs): how the existing Payment Services Directive (PSD2) interacts with the Markets in Crypto-Assets Regulation (MiCA), particularly where electronic money tokens (EMTs) are concerned.
As both regulatory regimes are designed to address different financial activities, the risk of duplication and regulatory uncertainty has been a growing concern for both regulators and the market participants. The EBA's opinion provides crucial clarity on this issue and outlines practical steps to guide national competent authorities (NCAs) during the transitional period.
Clarifying the Overlap
The primary issue raised in the EBA's opinion revolves around EMTs — stablecoins that purport to maintain a stable value by reference to a single fiat currency — and whether the services involving these tokens fall under the remit of PSD2, MiCA, or both. Because EMTs can function similarly to traditional payment instruments, they raise the possibility of being regulated under PSD2's framework for payment services, in addition to MiCA's bespoke regime for crypto-assets. This dual qualification has significant implications, including the possibility of requiring double authorisation for CASPs — first as electronic money institutions (EMIs) under PSD2, and second as CASPs under MiCA.
The EBA's analysis adopts a functional approach, focusing on the nature of the service being offered rather than the label of the asset. For instance, if a CASP facilitates a wallet-to-wallet transfer of EMTs on behalf of a customer, that activity may be considered a "payment transaction" under PSD2. This remains true even if the transaction occurs solely on a distributed ledger and involves EMTs rather than fiat currency. Notably, the EBA confirmed that even intra-account transfers — where funds move between two wallets held in the same name — can fall within PSD2's scope if the transaction resembles a payment service.
No-Action Approach and Transitional Measures
To prevent immediate regulatory overreach and to support a smooth transition toward a unified framework, the EBA recommends a "no-action" approach. Under this guidance, NCAs are advised not to require dual authorisation for CASPs conducting EMT transfers during a transitional period until 2 March 2026, unless those services clearly replicate retail-facing payment functions. After that date, NCAs are advised to prevent entities that are not licenced as a PSP or have not entered into a partnership with a PSP, from providing services related to EMTs that qualify as a payment service.
Crucially, the EBA distinguishes between CASPs that act on their own account (e.g., market makers or proprietary traders) and those that act on behalf of clients in transferring EMTs. Only the latter category raises concerns under PSD2, and even then, enforcement is discouraged unless the CASP performs functions comparable to a traditional payment service provider (PSP).
Prudential Requirements and Capital Rules
Another focal point of the opinion is how prudential rules should apply to CASPs engaging in payment-like activities. Entities that are subject to both MiCA and PSD2 obligations may find themselves navigating differing capital and reporting requirements. The EBA recommends aligning MiCA's capital requirements with the risk-sensitive principles found in PSD2, while allowing NCAs to apply supervisory discretion. This pragmatic approach ensures that regulation remains proportionate without undermining financial stability or consumer protection.
The opinion also notes that dual-authorised firms should not be subject to duplicative supervision. Instead, authorisation procedures under one regime should inform and streamline those under the other. For example, information already submitted for MiCA licensing should not need to be resubmitted for PSD2 approval.
Enhancing Consumer Protection and Security
The EBA highlights that, despite MiCA's detailed framework for market integrity and disclosure, it lacks the consumer protection measures enshrined in PSD2 and the Payment Accounts Directive (PAD). Key protections — such as rights to refunds, limits on liability for unauthorised transactions, clear pricing structures, and complaint resolution mechanisms — are absent in MiCA but essential in a retail context. The EBA recommends that EU legislators incorporate these features into MiCA or, alternatively, amend PSD3 to ensure consistent consumer safeguards regardless of the asset used.
In terms of technical requirements, the EBA affirms that strong customer authentication (SCA), a cornerstone of PSD2's anti-fraud regime, should also apply to custodial wallets used for EMT transactions. While open banking obligations, such as those mandating access to account data via APIs, are not immediately extended to CASPs, the EBA does not exclude this possibility for future reform.
Interoperability with SEPA and Payment Infrastructure
To maintain coherence with Europe's payment ecosystem, the EBA advocates applying PSD2 requirements on SEPA compatibility and unique payment identifiers to qualifying crypto-related services. By ensuring that EMT transactions meet these technical standards, the EU can promote integration and interoperability between crypto-assets and traditional payment rails.
Recommendations to Legislators and Supervisors
The EBA concludes its opinion with concrete proposals for the European Commission and EU co-legislators. These include amending MiCA to incorporate core PSD2 protections, using PSD3 to clarify the application of payment rules to crypto-assets, and granting NCAs discretion to impose or waive specific requirements based on a risk-based assessment. The opinion also suggests that overlapping regulatory regimes can be managed effectively through procedural alignment and information-sharing, rather than wholesale duplication of licensing or supervision.
Looking Ahead
The EBA's opinion offers a clear roadmap for regulators and market participants navigating the intersection of crypto and traditional financial services. By adopting a transitional "no-action" stance and proposing targeted legislative amendments, the EBA strikes a careful balance between innovation, legal clarity, and consumer protection. For CASPs, payment institutions, and legal advisors alike, the message is clear: the regulatory environment is evolving—but in a coordinated and considered manner.
Firms operating in the crypto and payments space should thus begin reviewing their business models, licensing strategies, and compliance frameworks. The EBA's guidance is a timely reminder that the road to regulatory certainty may be complex, but it is now more clearly signposted than ever.
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