Circle Exec Says EU Risks “Regulatory Own Goal” Amid MiCA–PSD2 Clash

Stablecoin corporations within the European Union face a serious regulatory problem. From March 2026, suppliers of e-money token (EMT) custody and switch companies could also be required to carry each a MiCA crypto license and a separate fee companies license for a similar exercise.

This case creates a major compliance burden, with business leaders warning that it may delay the adoption of euro stablecoins.

Regulatory overlap creates a compliance disaster

The reason for the issue is the overlap between the MiCA rules (Markets in Crypto-Belongings) and the Cost Companies Directive (PSD2).

In June 2025, the European Banking Authority issued a No Motion Letter to make clear the interplay between MiCA and PSD2 for crypto asset service suppliers managing EMTs.

The rules confirmed that storing and transferring stablecoins on behalf of shoppers is a fee service below PSD2. Consequently, corporations that have already got a MiCA license to deal with EMTs should additionally acquire a fee establishment license or companion with a acknowledged fee service supplier.

The EBA has offered for a transition interval till March 2, 2026. Throughout this era, nationwide authorities should chorus from imposing duplicate licensing necessities. This association ends in lower than 5 months.

After that, crypto corporations will face two regulatory frameworks for a single enterprise exercise, successfully doubling capital necessities and compliance prices.

This twin licensing strategy contradicts MiCA’s core aim of attaining uniform regulation. The EBA acknowledged in its official opinion that each monetary exercise needs to be ruled by one legislation.

But each MiCA and PSD2 now management the custody and switch companies of stablecoins, leading to redundant oversight that will increase prices with out enhancing client safety.

Capital necessities emphasize the burden. An organization that has each permits should adjust to:

• MiCA’s minimal capital of €125,000 for crypto asset service suppliers
• One other €125,000 for PSD2 fee companies

These complete €250,000 or virtually $290,000. Extra compliance, reporting and monitoring charges for each regimes additional improve operational challenges.

Trade warns of injury to competitiveness

Patrick Hansen, Circle’s EU coverage lead, has underlined the chance posed by this regulatory battle. In a submit on

“Below present EBA pointers, corporations utilizing e-money tokens (EMTs) might quickly face twin licensing necessities: a MiCA CASP license and a PSD2 (quickly to be PSD3) fee license for a similar custody or switch exercise – from March 2026. Meaning duplication of rules for corporations dealing with stablecoin companies,” Hansen explains.

Hansen argues that the pitfall of double licensing conflicts with the EU rules of proportionality, authorized readability and consistency.

The state of affairs can also be at odds with EU efforts to cut back regulatory complexity and enhance competitiveness. Initiatives such because the European Fee’s simplification agenda and Mario Draghi’s competitiveness report name for fewer regulatory obstacles, no more.

Along with compliance prices, the overlap additionally has broader penalties. Crypto asset service suppliers distribute the vast majority of MiCA regulated stablecoins.

If duplicate licenses make these companies unsustainable, suppliers might depart the EU or cut back their actions. This situation would sluggish the expansion of euro-pegged stablecoins, undermining the EU’s digital finance ambitions and the euro’s international position.

A research by the Journal of Worldwide Financial Legislation exhibits that the EU has applied the strictest stablecoin rules in main markets. A Could 2025 benchmark research discovered that MiCA has larger prudential and protecting requirements than US and UK rules.

Including PSD2 licenses on high of MiCA may push service suppliers into extra accommodating jurisdictions, widening the regulatory hole.

Proposed options and legislative course of

The EBA’s No Motion Letter outlines two key options for the laws.

• Amend MiCA to incorporate related fee service provisions from PSD2.

This is able to create a single framework for EMT operations, preserving client protections and eliminating the necessity for separate fee licenses.

• Amend the upcoming Cost Companies Directive 3 and the Cost Companies Regulation.

This is able to exempt MiCA-licensed corporations from separate fee service guidelines for EMT custody and transfers.

The European Parliament’s briefing on PSD3 exhibits that the legislative course of is ongoing and adoption is predicted to happen after 2025.

This provides lawmakers a restricted window so as to add particular exemptions earlier than the March 2026 deadline. Trade voices are calling for fast motion on two fronts.

• Lengthen the transition interval past March 2026 till at the very least 2027 to keep away from a regulatory hole whereas lawmakers regulate the principles.
• Be certain that PSD3 splits or cross-references MiCA licensed actions, eradicating duplicate licenses for companies already lined.

• Some proposals additionally recommend exempting EMT transfers to and from self-custodial wallets from fee companies guidelines.

The EBA pointers on streamlined licensing present non permanent reduction. Nationwide authorities can let corporations reuse documentation from their MiCA software when making use of for fee licenses, lowering administrative duplication.

Regulators are additionally inspired to chill out enforcement of sure PSD2 provisions, equivalent to safeguards and open banking guidelines, for EMT companies through the transition.

Nonetheless, essential obligations stay. Strict buyer authentication and fee fraud reporting necessities stay in place even through the no-action interval.

These measures will assist shield shoppers as broader reforms happen. Policymakers should now stability obligatory safeguards with the necessity to take away regulatory overlaps that might hinder innovation and progress.

The approaching months are essential. If the EU doesn’t resolve this regulatory situation earlier than March 2026, the market may fragment, making stablecoin companies too costly for a lot of suppliers.

Corporations might depart and customers might flip to unregulated or offshore options. Legislative alignment is essential to keep up a secure and aggressive stablecoin market within the EU.

The submit Circle Exec Says EU Dangers Trigger ‘Regulatory Personal Objective’ Amid MiCA-PSD2 Conflict appeared first on BeInCrypto.