Stablecoin companies in the European Union are approaching a major regulatory challenge. Starting in March 2026, providers of e-money Token (EMT) custody and transfer services may be required to have both a MiCA crypto license and a separate payment services license for the same activity.
This situation creates a significant compliance burden, and industry leaders warn that this could stifle the adoption of euro- Peg stablecoins.
Overlapping regulations cause compliance crisis
The root of the problem lies in the overlap between the MiCA (Markets in Crypto-Assets) regulation and the Payment Services Directive (PSD2).
In June 2025, the European Banking Authority issued a No Action Letter to clarify the interaction between MiCA and PSD2 for crypto asset service providers managing EMT.
This guidance confirms that the custody and transfer of stablecoins on behalf of customers is a payment service under PSD2. Therefore, companies that are licensed under MiCA to handle EMT must also apply for a payment institution license or partner with a licensed payment service provider.
The EBA has introduced a transition period until 2 March 2026, during which time national authorities should temporarily refrain from enforcing dual authorisation requirements. This mechanism will end in less than five months.
Crypto companies would then be faced with two regulatory frameworks for the same business, significantly increasing Capital requirements and compliance costs.
The dual licensing approach goes against the core objective of MiCA, which is regulatory unification. The EBA has acknowledged in its official opinion that any financial activity should be subject to a single set of rules.
However, both MiCA and PSD2 currently regulate stablecoin custody and transfer services, leading to overlapping oversight, increasing costs without improving consumer protection.
The Capital requirements make this burden clear. A business holding both licenses must meet:
- Minimum Capital of €125,000 under MiCA for crypto asset service providers
- Additional €125,000 for payment services under PSD2
The total is €250,000 or nearly $290,000. The additional compliance, reporting and monitoring costs under both regimes add to the operational challenge.
Industry warns of damage to competitiveness
Patrick Hansen, head of EU policy at Circle, highlighted the risks of this regulatory conflict. In a post on X (Twitter), Hansen argued that if the MiCA–PSD2 conflict is not resolved by the March 2026 deadline, it would be a major setback for the EU.
“Under current EBA guidance, businesses using e-money Token (EMTs) could soon face a dual licensing requirement: a CASP license under MiCA and a payment license under PSD2 (soon PSD3) for the same custody or transfer activities — starting from March 2026. That means duplication of regulation for companies handling stablecoin services,” Hansen explained .
Hansen argues that the dual licensing trap goes against EU principles of proportionality, legal clarity and consistency.
This situation also runs counter to EU efforts to reduce regulatory complexity and boost competition. Initiatives such as the European Commission’s simplification agenda and Mario Draghi’s competitiveness report call for fewer regulatory barriers, not more.
Beyond compliance costs, the overlap has broader implications. Crypto asset service providers that distribute the majority of stablecoins are regulated by MiCA .
If dual licensing makes these services unsustainable, providers could leave the EU or scale back operations. This scenario would slow the growth of euro- Peg stablecoins , undermining the EU’s digital finance ambitions and the euro’s global Vai .
A study in the Journal of International Economic Law found that the EU has the strictest stablecoin regulations among major markets. A comparative study conducted in May 2025 concluded that MiCA sets higher standards of prudence and assurance than those in the US and UK.
Adding a PSD2 licensing requirement on top of MiCA could cause service providers to migrate to more “relaxed” jurisdictions, widening the regulatory gap.
Proposed solutions and legislative roadmap
The EBA No Action Letter outlines two main ways to amend the law.
- Modify MiCA to integrate relevant payment services regulations from PSD2.
This would create a unified framework for EMT operations, both protecting consumers and eliminating the need for separate payment licenses.
- Amendments to the Payment Services Directive 3 (PSD3) and the upcoming Payment Services Regulation.
This would exempt MiCA-licensed firms from separate payment services rules for custody and EMT transfers.
The European Parliament's summary of PSD3 shows that the legislative process is still ongoing and is expected to be adopted after 2025.
This gives lawmakers only a limited window of time to add specific exemptions before the March 2026 deadline. Industry is calling for quick action on both fronts.
- Extend the transition period beyond March 2026 to at least 2027 to avoid a legal gap while lawmakers tweak the rules.
- Ensure PSD3 includes exceptions or cross-references to activities already licensed under MiCA, eliminating double licensing of covered services.
- Some proposals also recommend exempting legitimate EMT transfers to and from self-custody wallets from the payment services regulation.
The EBA’s guidance on streamlined licensing procedures provides temporary relief. National regulators can allow businesses to reuse documents from their MiCA records when applying for payment service licenses, reducing administrative duplication.
Supervisors are also encouraged to relax the enforcement of some provisions of PSD2, such as the customer money protection and open banking provisions, for EMT services during the transition period.
However, core obligations remain. Strong Customer Authentication and payment fraud reporting remain in effect, even during the “no-action” period.
These measures help protect consumers while broader reforms progress. Now, policymakers need to balance necessary protections with the need to remove regulatory overlap that could stifle innovation and growth .
The coming months are crucial. If the EU does not resolve this regulatory issue by March 2026, the market could Shard, making stablecoin services too costly for many providers.
Businesses may leave, and users may switch to unregulated or offshore options. Legislative harmonization is key to maintaining a stable and competitive EU stablecoin market.
