How to Ensure Your Crypto Business Aligns With PSD2 Compliance in 2026

The European regulatory landscape for digital assets is currently undergoing a massive structural transformation, demanding immediate and precise action from industry participants. As we look at the 2026 landscape, the revised Directive on payment services in the internal market (PSD2) remains the strict enforcement standard governing financial transactions across the block. 

However, the European Union is not standing still, as it is actively preparing for the application date of the forthcoming Payment Services Regulation (PSR) and the transposition deadline of the forthcoming PSD3.

For crypto businesses aiming to achieve mainstream adoption, establishing a robust crypto-fiat bridge is no longer an optional feature. If you intend to offer fiat wallets, payment cards, or seamless transfers to your users, you must align your operations strictly with traditional payment services regulations, rather than relying solely on the Markets in Crypto-Assets Regulation (MiCA). 

The European Banking Authority (EBA) has focused heavily on the interplay between PSD2 and MiCA, particularly regarding the authorisation and supervision of Crypto-Asset Service Providers (CASPs) that carry out transactions using electronic money tokens (EMTs).

The regulatory grace period is ending abruptly. The transition period previously established under the EBA’s No Action letter (NAL) is scheduled to conclude definitively on 2 March 2026. This NAL was initially designed to facilitate business continuity for CASPs that were already carrying out EMT transactions. 

Because this transition period was intentionally limited to a mere nine months to minimise the time unauthorised entities could operate, more than 100 CASPs have already approached regulators or submitted applications. 

Navigating this complex, fast-closing window requires unparalleled expertise. LegalBison serves as your strategic partner, acting as the vital bridge between complex EU regulatory frameworks and your company’s operational readiness.

Cover the basics: What Is a PSD2 License? The Complete Guide for Fintech & Crypto Startups

Does PSD2 apply to your crypto business?

Founders in the Web3 space often operate under the misconception that dealing exclusively in digital assets removes them from the purview of traditional banking laws. However, the regulatory trigger for PSD2 is highly sensitive. If your crypto platform processes fiat payments, such as conducting money remittance or managing acquiring transactions, or if you issue electronic money to fund digital fiat wallets, your operations definitely fall under PSD2.

The EBA has provided concrete guidance that eliminates any ambiguity regarding EMTs. The authority has confirmed that the execution of transfers involving EMTs will frequently qualify as a regulated payment service. This classification applies strictly regardless of whether the custodial wallets offered by your CASP actually qualify as standard payment accounts under national law.

Furthermore, PSD2 rules offer absolutely no leniency for internal platform movements. The EBA has clarified that PSD2 does not make an exception for payment transactions executed to or from different payment accounts held by the exact same payment service user, even if those accounts are serviced by the identical payment service provider. Consequently, first-party transfers of EMTs, such as moving tokens between a user’s trading wallet and their custodial vault within your platform, still qualify as payment transactions and are subject to the full force of PSD2 rules.

Historically, some crypto marketplaces and platforms attempted to circumvent these licensing requirements by relying on the commercial agent exemption. Relying on this exemption is becoming increasingly dangerous and difficult under stricter EBA interpretations, effectively pushing the vast majority of crypto marketplaces to seek formal payment licensing to ensure their survival.

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Core PSD2 compliance pillars for 2026

Building a compliant framework requires integrating the fundamental pillars of European payment security into your product architecture. Interestingly, to ease the immediate regulatory burden, the EBA has advised national competent authorities (NCAs) that once a CASP receives authorisation as a payment services provider, the supervision and enforcement of certain PSD2 requirements should not be prioritised immediately. 

This temporary leniency specifically applies to the safeguarding of EMTs and specific requirements for disclosing information to consumers pertaining to applicable charges.

Despite this phased supervisory approach, your technological infrastructure must be built to support the core compliance pillars of PSD2 in 2026. These foundational requirements include:

• Implementing Strong Customer Authentication (SCA) by combining at least two of three distinct elements, which include Knowledge (a password), Possession (a mobile device), and Inherence (biometric data);
• Utilising dynamic linking for all remote transactions, which is the strict requirement to link the authentication code to the specific transaction amount and the specific payee, acting as a crucial defence mechanism against man-in-the-middle attacks during transfers;
• Adhering to Open Banking (XS2A) obligations by allowing authorised Third Party Providers access to user account data via highly secure APIs, representing a mandated shift away from outdated screen scraping techniques toward dedicated interfaces;
• Safeguarding funds with absolute precision, honouring the strict requirement to keep user fiat funds entirely separate from company operational funds through proper segregation, or covering them completely with an approved insurance policy.

Before you continue: Everything You Need to Know About the PSD2 Regulation Transition Period

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Choosing the right license: PI or EMI?

To meet these complex PSD2 requirements, a CASP has two primary legal pathways. The entity must either obtain an authorisation to provide payment services itself, or it must act as an official agent of a Payment Service Provider (PSP) that is already fully authorised to provide the respective payment services. In cases where a CASP partners with an existing PSP, NCAs will carefully assess whether that partner PSP itself requires a separate authorisation under Article 59 of MiCA.

The EBA has outlined three distinct scenarios for CASPs as the 2 March 2026 deadline arrives:

• In the first scenario, the CASP has successfully obtained its PI or EMI authorisation, or partnered with one, and is fully allowed to continue carrying out EMT transactions; 
• In the second scenario, the CASP has submitted an application but is waiting for approval. To continue operating, these pending entities must meet extremely strict conditions, such as having submitted all required documents, responding transparently to NCA queries, having no history of supervisory measures or anti-money laundering infringements, and having reasonable grounds to expect rapid approval. Even if allowed to operate temporarily, these pending CASPs must cease all marketing activities related to EMT payment services, and they absolutely cannot provide these services to any new clients;
• In the third scenario, if a CASP fails to apply or fails to meet these conditions, they will be legally required to cease providing EMT payment services and actively offboard their existing clients.

Given these high stakes, selecting the correct license type is paramount for your business continuity. The choice between a Payment Institution (PI) and an Electronic Money Institution (EMI) dictates your operational capabilities.

Preparing for PSD3 in 2026

While ensuring compliance with PSD2 is the immediate critical task, forward-thinking executives must look toward the incoming regulatory updates. The EBA’s current advice and transitional focus specifically bridge the gap between the NAL period and the application dates of the highly anticipated PSR and the transposition of PSD3. The ultimate goal of the EBA is to play an active role in building a common Union supervisory culture and ensuring consistent supervisory practices throughout the internal market.

To remain competitive and compliant, your crypto business must prepare for the structural shifts that PSD3 will introduce:

• PSD3 aims to introduce profound harmonisation across the European Union by merging the historically separate PI and EMI regimes into a single, unified licensing framework, effectively eliminating regulatory arbitrage between member states;
• Enhanced fraud prevention measures will become the new standard, meaning mandatory operational checks like the Verification of Payee will be required to ensure that client funds are always routed to the correct, verified recipient;
• Existing license holders must prepare for potential re-authorisation procedures, meaning that current PIs and EMIs may be required to completely update their compliance files and undergo fresh regulatory scrutiny as the new PSR comes into force.

How LegalBison fast-tracks your authorisation

The 2 March 2026 deadline leaves no room for administrative errors or delayed applications. Securing a PI or EMI license is a complex, time-consuming endeavour that requires a deep understanding of local regulatory nuances and European banking standards. LegalBison provides the premier strategic legal advantage, transforming a daunting regulatory hurdle into a streamlined, predictable process for your digital asset business.

Our team of dedicated legal professionals accelerates your path to market through comprehensive support structures:

• We provide strategic jurisdiction selection, offering precise advice on choosing accommodating regulatory environments like Lithuania, the Netherlands, or other friendly jurisdictions that align with your specific business model;
• We handle all exhaustive document preparation on your behalf, meticulously drafting your Business Plan, your complex Programme of Operations, and your rigorous Security Policy documents to meet the exact standards of the regulator;
• We execute the complete company formation process, legally setting up the required corporate entity and establishing a compliant local head office to satisfy all physical presence requirements.

Aligning your crypto business with PSD2 and preparing for PSD3 is a mandatory step for European operations. Do not wait until the EBA transition period expires to secure your legal standing. Protect your user base, safeguard your revenue streams, and ensure your business continuity by beginning your compliance journey with LegalBison today.

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