In a significant step towards resolving the regulatory friction between crypto innovation and traditional financial services, the European Banking Authority ("EBA") has issued a "No Action" letter aiming to provide regulatory clarity to crypto-asset service providers ("CASP"s) navigating the overlapping requirements of the Payment Services Directive ("PSD2") and the Markets in Crypto-Assets Regulation ("MiCA") with a particular focus on services involving electronic money tokens ("EMTs").
At the centre of the challenge lies the dual legal nature of EMTs: they are defined as "crypto-assets" under MiCA and simultaneously as "funds" under PSD2. This dual status has sparked legal headaches across the EU, with conflicting interpretations and the added complexity of CASPs needing two separate licences to operate.
To avoid this regulatory burden, the EBA advises national regulators to pause aggressive enforcement of PSD2 rules for most EMT-related services already covered by MiCA until the upcoming PSD3 and Payment Services Regulation ("PSR") come into effect.
The key takeaways:
- Limited application of PSD2: Certain EMT-related activities—such as the exchange of crypto-assets for fiat or other crypto-assets, or the purchase of crypto-assets using EMTs – do not constitute payment services and fall outside the scope of PSD2.
- PSD2 remains applicable to payment functions: Where CASPs offer transfer of EMTs service on behalf of clients or operate custodial wallets that facilitate EMT transfers to or from third parties, PSD2 requirements continue to apply.
- No dual licensing during transition: CASPs authorised under MiCA will not need a separate PSD2 licence for most EMT-related services until PSD3/PSR enters into force.
- Toward a unified framework: the EBA advocates for EMT-related services to be regulated under a single legal framework, either through enhancing MiCA or adapting PSD3/PSR, without imposing duplicate authorisation requirements.
The EBA's intervention brings temporary relief to a regulatory ambiguity, setting expectations for both CASPs and national authorities ahead of PSD3 and the PSR. While it reduces immediate compliance pressures, it also signals that EMT-related services will remain under close scrutiny. With the March 2026 deadline marking the end of the transitional period, the path forward is clearer, but far from settled.
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