Building on our recently published chapter in the Chambers and Partners Blockchain Guide 2025
This briefing launches our Blockchain Insight Series, which expands on the material we contributed to the newly released Chambers and Partners Blockchain Guide 2025. In this second article we analyse we analyse the status of Asset-Referenced Tokens (ARTs) and Electronic Money Tokens (EMTs) under the Markets in Crypto-Assets Regulation (MiCA). Additionally, we examine the EBA’s no-action letter, which provides temporary relief for CASPs and issuers during the transition period, and discuss its implications as firms work to comply with MiCA’s full requirements
As of 30 June 2024, any issuer of an ART or EMT offered to the public or admitted to trading within the EU must be authorized under MiCA. This change is particularly important for Crypto-Asset Service Providers (CASPs) that facilitate the listing, promotion, or trading of these tokens. Practically, this means that CASPs can only list or promote stablecoins if the issuer has obtained the necessary EU authorization under MiCA. If a CASP’s platform is used to list these tokens on behalf of a third-party issuer, the platform must secure written consent from the authorized issuer to ensure compliance with MiCA.
The European Securities and Markets Authority (ESMA) previously outlined a phased approach for enforcing MiCA’s provisions concerning ARTs and EMTs:
Phase I: Restricting Non-Compliant ARTs and EMTs
By 31 January 2025, CASPs were required to restrict services facilitating the acquisition of non-compliant ARTs and EMTs. CASPs had to ensure that only authorized tokens were listed and refrain from launching new products involving non-compliant tokens.
Phase II: “Sell-Only” for Non-Compliant ARTs and EMTs
After 31 January 2025 and until 31 March 2025, CASPs could offer non-compliant ARTs and EMTs on a “sell-only” basis, allowing investors to liquidate or convert these tokens.
ESMA considers that “mere custody and transfer of these crypto-assets should remain possible”, but CASPs should clearly inform its clients of the restrictions attached to the non-compliant ARTs and EMTs.
Considerations for CASPs Handling EMTs
The European Banking Authority (EBA) issued a No-Action Letter to address several important aspects for CASPs, particularly focusing on when PSD2 authorization is required and the transitional steps leading up to the deadline of 1 March 2026.
What is PSD2 Authorization?
The Payment Services Directive 2 (PSD2) is a European Union directive that governs payment services and payment service providers (PSPs) across the EU and the European Economic Area (EEA). PSD2 authorization is required for any entity that wants to offer payment services, which include services related to the transfer, execution, and custody of funds. The primary goal of PSD2 authorization is to ensure that payment service providers (PSPs) meet specific standards of consumer protection, security, and transparency. By obtaining PSD2 authorization, a provider is granted the legal right to operate within the EU under this regulatory framework, with oversight from national competent authorities (NCAs).
PSD2 Authorization and EMTs under MiCA
Under Article 48 of MiCA, EMTs are categorized as electronic money (or e-money). This classification means that any issuer of EMTs is required to comply with the same regulatory standards set out in PSD2 for e-money issuers. Consequently, issuers of EMTs must obtain PSD2 authorization to legally offer these tokens within the EU.
Here is a summary of the points you need to consider:
1. Services Requiring PSD2 Authorization
According to the EBA, CASPs will need PSD2 authorization to carry out certain services related to EMTs. These services include:
- Transfer of EMTs on behalf of clients, which means that any CASP involved in transferring EMTs as a service must obtain the necessary PSD2 authorization.
- Custody and administration of EMTs, where custodial wallets allow third-party transactions.
2. Authorization, PSP Partnership, and Transition Period
CASPs benefit from a transition period to meet the PSD2 licensing requirements:
- By 1 March 2026, every CASP must either obtain its own PSD2 license or establish a partnership with a licensed PSP to continue offering EMT services, such as transfers and custodial services,
- CASPs can use the same information from their MiCA filings when applying for a PSD2 license, easing the regulatory burden, and
- After 1 March 2026, CASPs without a PSD2 license or a partnership with a licensed PSP must cease providing services involving the transfer or custody of EMTs.
3. PSD2 Provisions with Reduced Enforcement Priority
The EBA has acknowledged that certain provisions of PSD2 will be temporarily deprioritized for CASPs handling EMTs until the introduction of Payment Services Directive 3 (PSD3) and the Payment Services Regulation (PSR). These include:
- Safeguarding of Client Funds – While PSD2 requires segregated accounts or insurance/guarantee mechanisms under Article 10, MiCA’s own safekeeping rules (Article 70) apply to EMTs. NCAs are advised to deprioritize enforcement of PSD2’s safeguarding provisions in favor of MiCA’s safeguards for EMTs,
- Disclosure of Charges and Execution Time – Under Article 56 of PSD2, CASPs may state ranges or estimated information about charges and execution times rather than precise figures,
- Unique Identifiers: PSD2 generally expects the use of an IBAN (International Bank Account Number), but for EMTs, wallet addresses will serve this role. IBAN-specific rules under Article 88 will be on hold for the time being, and
- Open Banking: PSD2’s Open Banking provisions, which apply to traditional banks via APIs, will not extend to custodial wallets until the new legislative framework is in place.
4. Security and Fraud Prevention
The EBA has outlined security measures for CASPs handling EMTs:
- Strong Customer Authentication (SCA) – As per Articles 97 and 98 of PSD2, CASPs must implement two-factor authentication when clients open custodial wallets or initiate EMT transfers. Enforcement of this requirement will begin on 2 March 2026,
- Fraud Reporting – Starting on 2 March 2026, CASPs will be required to report periodic fraud statistics to their NCA. These reports must be limited to data fields related to e-money, as defined in EBA Guidelines 2018/05 under Article 96(6) of PSD2.
5. Services Exempted from PSD2 Authorization
Certain services related to EMTs are explicitly exempt from PSD2 authorization, including:
- Exchange of Crypto-Assets for Funds or Other Crypto-Assets – If the exchange is conducted with proprietary capital (i.e., the CASP does not hold client funds), this does not require a PSD2 license.
- Intermediating the Purchase of Crypto-Assets with EMTs – Services that facilitate the purchase of crypto-assets using EMTs are also exempt.
6. Future Legislative Developments
The EBA has called on European legislative bodies to harmonize and clarify the regulatory framework in future updates to PSD2 and the PSR. This may involve amendments to MiCA to align consumer protection and security standards for crypto-assets with those applicable to traditional payment services.
Conclusion
In summary, by 1 March 2026, any CASP handling EMTs must either secure its own PSD2 license or partner with a licensed PSP to continue offering services related to the transfer or custody of EMTs. Failure to do so will require CASPs to cease these activities. The EBA’s Opinion offers clarity on the steps CASPs need to take, as well as the transitional arrangements in place until 2026.
For more information on stable coins and PSD2 authorization, please contact the Lexters team through the Contact Section.
Resources:
This note is for general information only and does not constitute legal advice.
