Three Licenses, One Payment: Europe’s Stablecoin Compliance Puzzle
A single stablecoin payment across Europe can touch three separate regulatory regimes — Crypto-Asset Service Providers (CASPs), Payment Institutions (PIs), and Electronic Money Institutions (EMIs). Understanding how these licenses divide responsibilities is becoming essential for any firm building or operating stablecoin payment rails under MiCA and the revised Payment Services Directive.
The Division of Labor
Each license covers a distinct function in the payment lifecycle:
- CASPs — authorized under MiCA — handle the crypto side: custody of stablecoin tokens, exchange between crypto and fiat, and transfer services. They are the gateway for converting and moving digital assets.
- PIs — licensed under PSD2 — provide payment services such as executing payment transactions, money remittance, and payment initiation. They move fiat value between accounts but cannot issue e-money.
- EMIs — also under PSD2 — can issue electronic money, which is where stablecoin redemption into fiat e-money balances typically lives. They hold the e-money float and provide the settlement leg.
Why the Stack Matters
The practical implication is that no single license covers an end-to-end stablecoin payment. A merchant accepting a euro stablecoin needs a CASP to handle the token leg, an EMI to issue and redeem e-money, and a PI to execute the underlying fiat payment. Firms that try to operate with only one license risk falling into regulatory gaps — particularly around safeguarding customer funds and AML obligations.
This layered structure also affects capital requirements, safeguarding rules, and passporting. A CASP passporting under MiCA faces different obligations than an EMI passporting under PSD2, and combining them requires careful corporate structuring — often through a group with separate licensed entities.
Implications for Market Structure
The result is consolidation pressure: smaller players may struggle to maintain three licenses, pushing them toward partnerships or acquisition by larger groups that already hold the full stack. Banks and established payment firms with existing EMI and PI licenses are well-positioned to add CASP authorizations and capture the stablecoin payment flow. Meanwhile, pure crypto-native firms must decide whether to build the fiat leg themselves or partner with incumbents.
Forward Look
As MiCA fully phases in and the EU’s instant payments regulation takes hold, expect regulators to clarify how CASP, PI, and EMI obligations interact — particularly on safeguarding and interoperability. The firms that map this stack correctly early will be the ones able to offer compliant, seamless stablecoin payments at scale across the single market.
