The letter acknowledges that the provision of certain services in relation to EMTs can trigger licensing requirements both under MiCA as crypto-asset services and PSD2 as payment services.

The EBA therefore advocates for a pragmatic approach, advising NCAs to grant a transition period until 2 March 2026 before enforcing authorisation requirements for PSD2 for CASPs.

After that date, CASPs must cease providing EMT-related services, unless they are licensed as a PSP or have partnered with a licensed PSP.

Even after obtaining authorisation as a PSP, NCAs are encouraged to enforce PSD2 requirements selectively for crypto asset service providers (CASPs) engaging with EMTs.

To safeguard consumers, the EBA underscores the need for strong customer authentication (SCA) for accessing custodial wallets and initiating transfers, fraud reporting, and cumulative capital adequacy requirements for such services.

However, the EBA recommends deprioritising certain PSD2 provisions, such as those concerning safeguarding, fee disclosures, the maximum execution time of payment transactions, elements tied to unique identifiers like IBANs, and open banking. This differential enforcement aims to strike a balance between consumer protection and operational feasibility during the transition.

Under the EBA’s advice, NCAs should classify certain services involving the transfer, custody, and administration of EMTs as payment services within the scope of PSD2 when performed by CASPs on behalf of clients.

Likewise, custodial wallets that facilitate EMT transactions and are operated in the name of clients should, under this guidance, be treated as payment accounts.

Certain crypto-related activities are excluded from PSD2 regulation under the EBA’s guidance.

These exclusions include:

• The exchange of crypto assets for fiat or other crypto assets
• Payments intermediated through CASPs for purchasing other crypto assets with EMTs

Such activities are, instead, governed solely under MiCA, removing them from the overlapping remit of PSD2. This clarification aims to ensure consistent application of regulatory frameworks, minimising unnecessary burdens on CASPs.

The EBA explicitly states that its advice is not based on the adequacy of MiCA alone to mitigate risks associated with EMT transactions. Instead, the transitional measures reflect the practical challenges of requiring dual authorisations, which could overburden CASPs and destabilise the regulatory landscape. Crucially, the measures aim to maintain the high standards of consumer protection and market stability achieved under PSD1 and PSD2 over the past 15 years.

The suggested framework prioritises consumer confidence, ensuring safe and reliable EMT transactions while minimising compliance complexities during the regulatory overlap.

The EBA proposes that EU lawmakers and NCAs must work collaboratively to resolve long-term challenges associated with overlapping regulatory frameworks for EMTs under PSD2 and MiCA, by amending MiCA or by addressing the issue in the upcoming PSD3/PSR which will replace existing rules on payment services and electronic money.

However, the EBA rules out an alternative whereby EMTs are excluded from the scope of PSD3/PSR without a commensurate strengthening of requirements applicable to CASPs involved in EMT-related services under MiCA.

EBA’s press release can be found here.