by Coinstrooper Crypto Articles
Quick Take
  • Stablecoin firms in the European Union are approaching a major regulatory challenge.
  • This situation creates a significant compliance burden, with industry leaders warning it could stall euro stablecoin adoption.
  • The root of the issue is the overlap between the MiCA (Markets in Crypto-Assets) regulation and the Payment Services Directive (PSD2).
  • The guidance confirmed that custody and transferring stablecoins on behalf of clients is a payment service under PSD2.

What Happened

Regulatory Overlap Triggers Compliance Crisis

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 EMTs.

The guidance confirmed that custody and transferring stablecoins on behalf of clients is a payment service under PSD2. As a result, firms already licensed under MiCA to handle EMTs must also secure a payment institution license or work with a licensed payment service provider.

Market Context

The root of the issue is the overlap between the MiCA (Markets in Crypto-Assets) regulation and the Payment Services Directive (PSD2).

After that, crypto firms will face two regulatory frameworks for a single business activity, effectively doubling capital requirements and compliance costs.

Capital requirements highlight the burden. A business holding both licenses must meet:

MiCA’s €125,000 minimum capital for crypto asset service providers

A Journal of International Economic Law study demonstrates that the EU has implemented the strictest stablecoin regulations among major markets. A comparative study conducted in May 2025 found that MiCA sets higher prudential and safeguarding standards than regulations in the US and UK.

Why It Matters

Stablecoin firms in the European Union are approaching a major regulatory challenge. Beginning in March 2026, providers of e-money token (EMT) custody and transfer services may be required to hold both a MiCA crypto license and a separate payment services license for the same activity.

This situation creates a significant compliance burden, with industry leaders warning it could stall euro stablecoin adoption.

Patrick Hansen, Circle’s EU policy lead, has underlined the risk this regulatory conflict poses. In a post on X (Twitter), Hansen stated that failing to resolve the MiCA–PSD2 clash before the March 2026 deadline would be a major setback for the EU.

“Under current EBA guidance, businesses using e-money tokens (EMTs) could soon face dual licensing requirements: a MiCA CASP licence, and a PSD2 (soon PSD3) payment licence for the same custody or transfer activity — starting March 2026. That means regulatory duplication for firms handling stablecoin services,” Hansen explained.

If dual licensing makes these services unsustainable, providers may exit the EU or scale back their operations. This scenario would slow the growth of euro-pegged stablecoin, undercutting the EU’s ambitions in digital finance and the global role of the euro.

Adding PSD2 licensing on top of MiCA could drive service providers to more accommodating jurisdictions, widening the regulatory gap.

Details

The EBA has provided a transition period until March 2, 2026. During this period, national authorities should refrain from enforcing dual licensing requirements. This arrangement ends in less than five months.

This dual licensing approach contradicts the core goal of MiCA, which is to achieve unified regulation. The EBA acknowledged in its official opinion that any financial activity should fall under one law.

Yet, both MiCA and PSD2 now govern stablecoin custody and transfer services, resulting in redundant oversight that increases costs without improving consumer protection.

Another €125,000 for PSD2 payment services

These totals €250,000 or almost $290,000. Additional compliance, reporting, and supervisory fees for both regimes further increase operational challenges.

Industry Warns of Competitiveness Damage

Hansen argues that the dual licensing trap contravenes EU principles of proportionality, legal clarity, and consistency.

The situation also conflicts with EU efforts to reduce regulatory complexity and improve competitiveness. Initiatives such as the European Commission’s simplification agenda and Mario Draghi’s competitiveness report call for fewer regulatory obstacles, not more.

Beyond compliance costs, the overlap has wider effects. Crypto asset service providers distribute the majority of MiCA-regulated stablecoins.

Proposed Solutions and Legislative Pathway