Patrick Hansen, Circle’s Senior Director of EU Strategy and Policy, issued a stark warning on October 31, 2025, highlighting unresolved conflicts between European crypto regulations that threaten to impose significant compliance burdens on stablecoin service providers.
According to Hansen’s analysis, starting in March 2026, businesses handling e-money tokens (EMTs) may be required to obtain both a Markets in Crypto-Assets (MiCA) service provider license and a payment services license under the Payment Services Directive (PSD2) for identical custody or transfer activities. This dual licensing stems from regulatory interpretations of the MiCA-PSD2 overlap, contradicting MiCA’s intended goal of unified rules and violating core EU principles of proportionality and legal clarity.
Hansen emphasized that this situation could lead Crypto-Asset Service Providers to withdraw from custody and transfer services, potentially slowing the adoption of euro-denominated stablecoins and pushing users toward unbacked crypto assets. Circle CEO Jeremy Allaire supported this assessment, calling it a critical moment for regulatory simplicity and uniformity in the EU.
The European Banking Authority (EBA) has provided a transition period until March 2, 2026, during which national authorities should refrain from enforcing dual licensing. However, if unresolved, firms face substantial costs, including dual capital requirements of approximately €250,000 (€125,000 each for MiCA and PSD2) and increased operational burdens from redundant oversight.
Proposed solutions include extending the transition period to at least 2027 and amending the upcoming Payment Services Directive 3 (PSD3) legislation to add targeted carve-outs or cross-references, ensuring that EMT activities fall exclusively under MiCA supervision to prevent market fragmentation and maintain competitiveness.
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