MiCA Meets PSD2: EMTs and the Next Compliance Phase for CASPs

A CASP transition at the intersection of MiCA and PSD2

MiCA has already been in force for some time, with the MiCA-specific transitional period for existing CASPs still continuing in certain Member States until July 2026.

However, alongside this, European authorities introduced a separate transitional approach in response to ongoing industry debate around electronic money tokens and their interaction with payments regulation.

That additional supervisory transition ends today.

EMTs Under MiCA: More Than Just Stablecoins

Electronic money tokens are one of MiCA’s defined categories of crypto-assets. They are designed to maintain stable value by referencing a single official currency.

But MiCA did something structurally significant in Article 48(2): it treats EMTs as electronic money.

This means EMTs are not regulated only as crypto-assets. They are also legally positioned within the EU’s payments framework because electronic money qualifies as “funds” under PSD2.

So EMTs sit across two regulatory domains at once:

• Inside MiCA as crypto-assets

• Inside PSD2 as a form of transferable value

This dual character raised an immediate practical question for CASPs: when does providing services around EMTs become a payment activity?

The Functional Line: Asset vs Payment Use

Supervisors have consistently emphasised that the regulatory trigger is not the token itself but how it is used.

EMTs may circulate in the market without acting as payment instruments.

In many cases they function as trading assets, as settlement tools or as liquidity instruments. In these situations, activity typically remains within the MiCA perimeter.

But where EMTs are used to move value between parties, the nature of the service changes.

Examples more likely to fall within PSD scope include:

• Executing EMT transfers for clients

• Custody setups enabling third-party transfers

• Wallet environments operating like payment accounts

The distinction is therefore functional, not technological. An EMT becomes relevant to payments law when it enables value transfer between a payer and a payee.

What EMT Services Typically Stay Within MiCA?

Not every EMT-related service is a payment service. Where EMTs are treated primarily as crypto-assets rather than as instruments for transferring value between third parties, activity usually remains within the MiCA perimeter.

This typically includes situations where a CASP:

• Buys or sells EMTs in its own name

• Offers EMT trading against fiat or other crypto-assets

• Provides market-making or liquidity services

• Holds EMTs purely for safekeeping without enabling third-party transfers

• Supports EMT use for investment or trading purposes

In these cases, the CASP is acting more like a market intermediary than a payment facilitator. The EMT functions as an asset, not as a means of executing payments between users.

What EMT Services May Become Payment Services?

The regulatory position changes when the CASP’s role shifts from facilitating trading to enabling value transfer.

EMT-related services are more likely to fall within PSD2 where the CASP:

• Executes EMT transfers on behalf of users

• Enables users to send EMTs to third parties

• Provides custody that allows EMTs to be moved between payer and payee

• Operates wallets that function in practice like payment accounts

• Structures EMT flows to settle obligations between different parties
  
  

Here, the EMT is no longer acting primarily as a tradable crypto-asset, it is being used as a payment instrument. And that functional shift is what may trigger PSD authorisation requirements.

Why PSD Authorisation Enters the Picture

Where EMT-related services qualify as payment services, MiCA authorisation alone is no longer sufficient.

A provider must either:

• Obtain payment institution or EMI authorisation, or

• Operate through a regulated PSP

However, applying full PSD requirements immediately would have imposed significant operational strain on CASPs already transitioning into MiCA.

This is why supervisory flexibility was introduced.

The No-Action Period: A Temporary Alignment Window

In June 2025, the EBA issued a No-Action Opinion acknowledging that certain EMT-related activities could fall within PSD2.

Rather than requiring immediate compliance with the full payments regime, it allowed a transitional window until March 2, 2026.

During this period CASPs already offering EMT-related services were permitted to continue operating while assessing their regulatory positioning and preparing for PSD alignment.

This was never intended as a permanent exemption. It was a sequencing mechanism, allowing time for firms to adapt without sudden duplication of regulatory burdens.

Why the Transition Was Needed

The treatment of EMT-related activity remains under discussion in the broader reform of EU payments law through PSD3 and the forthcoming Payment Services Regulation.

Future legislative clarity may reshape how EMT functionality is treated. But those reforms are not yet in force.

The No-Action approach therefore served as a bridge between MiCA’s application and the eventual evolution of the payments framework. It ensured continuity without prejudging the long-term legal architecture.

How Supervision Worked During the Transitional Period

The No-Action approach did not suspend payments regulation entirely. Instead, it reshaped how it was applied.

Supervisors were encouraged to distinguish between:

Deprioritised Requirements

To avoid duplicative burdens while CASPs were already navigating MiCA authorisation, certain PSD expectations were treated with flexibility during the transition.

These included areas such as:

• Safeguarding arrangements for EMTs

• Certain disclosure requirements linked to payment charges

• Full application of some consumer-facing payment rules

This did not remove these obligations permanently. It simply meant they were not treated as immediate supervisory priorities while firms worked towards alignment.

Prioritised Risk Controls

At the same time, authorities made clear that core payment safeguards should still be applied.

In particular, CASPs were expected to maintain:

• Strong customer authentication when accessing custodial wallets

• Controls around EMT transfer initiation

• Fraud monitoring and reporting

• Appropriate own funds considerations

These elements reflected a supervisory focus on operational and consumer risk, even during the flexibility window.

Simplified Authorisation Path

To support continuity, authorities were also encouraged to streamline PSD authorisation processes.

This included:

• Reusing information already submitted during MiCA licensing

• Avoiding duplicative documentation requests

• Enabling EMT-related services to continue while applications were assessed

The intention was not to create a permanent shortcut — but to allow firms to transition without unnecessary operational disruption.

After March 2: Diverging Supervisory Paths

With the transition ending, supervisory expectations now differ depending on a firm’s position.

Authorities broadly recognise four situations.

Some CASPs have already obtained PSD authorisation or structured EMT payment services through regulated PSP partners. These firms may continue operating within that framework.

Others have submitted applications that are still under review. Supervisors may permit limited continuity while assessments are ongoing, often with constraints such as restrictions on new onboarding or marketing.

A third group includes firms whose applications are refused. In these cases, EMT-related payment services must be discontinued.

Finally, where no PSD alignment has been pursued, authorities are expected to require cessation of EMT activities that qualify as payment services.

A Shift in Supervisory Posture

The end of the No-Action period does not change the underlying legal framework but it changes how it is applied.

During the transition, EMT payment activity outside PSD authorisation existed in a managed state of supervisory tolerance.

After March 2, that tolerance narrows. Services that function as payment execution but remain outside the payments framework are no longer simply “in transition”. They may now be viewed as misaligned.

This Is Still Not the Final Step

Importantly, this milestone does not close the broader adjustment period facing CASPs. A further supervisory transition continues until July 2026.

This is not a phase-in of MiCA itself. Instead, it reflects the practical reality that aligning crypto activity with existing payments rules requires time, and coordination between regulatory regimes.

From Flexibility to Alignment

For firms that have structured their EMT services within PSD boundaries, March 2 represents continuity.

For those that have not, it marks a turning point.

The issue is no longer interpretative uncertainty. It becomes supervisory alignment.

EMT-enabled payment functionality is therefore likely to become an early focus of engagement between CASPs and regulators in the coming months.

Learn More

If you want to better understand EMTs, their interaction with PSD2, and the broader structure of MiCA,

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