PSD2 Regulation Update: Transition Period Ending 2 March 2026, What You Need to Know

The European regulatory landscape for digital assets is undergoing a profound transformation, requiring immediate attention from industry participants. On 12 February 2026, the European Banking Authority (EBA) issued a critical Opinion (1) regarding the complex interplay between the revised Payment Services Directive (PSD2) and the Markets in Crypto-Assets Regulation (MiCA). This document outlines the definitive supervisory priorities that national competent authorities (NCAs) will enforce at the end of the current transitional phase.

The defining event for the industry is that the transition period established under the EBA’s previous No Action Letter (NAL) regarding the supervision of Crypto-Asset Service Providers (CASPs) issuing or transacting with Electronic Money Tokens (EMTs) officially ends on 2 March 2026. 

The NAL, originally published on 10 June 2025, provided a temporary safe harbour intended to facilitate business continuity for CASPs that were already carrying out EMT transactions at that time. This advice covered the critical period between the publication of the NAL and the application dates of the forthcoming Payment Services Regulation (PSR) and the transposition deadline of the forthcoming PSD3.

However, this leniency was intentionally limited to a strict nine-month window to minimise the time during which unauthorised entities could provide regulated payment services within the European Union. Since the publication of the NAL, more than 100 CASPs have approached NCAs informally or submitted formal applications for authorisation as payment service providers, signalling a massive shift in compliance efforts. 

As this vital transition period rapidly closes, there is an urgent call to action for all crypto businesses to assess their licensing status immediately to ensure uninterrupted business continuity and avoid severe regulatory enforcement.

The intersection of MiCA and PSD2

Understanding the regulatory overlap is the first step toward achieving full compliance. The EBA has explicitly confirmed and clarified that crypto-asset services involving EMTs will very often qualify as standard payment services under the existing PSD2 framework. The core consequence of this classification is that providing these services requires formal authorisation under PSD2, entirely separate from any existing MiCA registrations.

The scope of this regulatory intersection is remarkably broad and captures operational structures that many businesses previously assumed were exempt. The EBA has firmly stated that this categorisation includes not just traditional payments processed to third parties, but even first-party transfers. A first-party transfer occurs when a user moves EMTs from one wallet to another wallet held by the exact same user within the platform of the same CASP. 

The regulatory logic is clear: PSD2 does not make an exception for payment transactions executed to or from different payment accounts held by the same payment service user, even if those accounts are serviced by the same payment service provider.

Therefore, internal wallet-to-wallet transfers of EMTs still definitively qualify as regulated payment transactions and are subject to the full weight of PSD2 rules. 

For example, in scenarios where a CASP provides custody and administration of EMTs and executes transfers of these assets on behalf of its clients, such transfers inherently constitute payment transactions. This applies to transfers made to the same client as part of the payout leg of a custody service, and it applies irrespective of whether the custodial wallet itself legally qualifies as a traditional payment account.

The fundamental requirement resulting from this intersection is absolute: CASPs performing these designated activities must hold a formal Payment Institution (PI) license, an Electronic Money Institution (EMI) license, or they must officially partner with an entity that is already fully authorised to provide these payment services.

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

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The three scenarios for CASPs

To maintain a common Union supervisory culture and ensure consistent practices across Member States, the EBA has clearly defined the regulatory outcomes based on a company’s status. 

By the time the NAL transition period comes to a definitive end on 2 March 2026, three distinct regulatory scenarios will apply to any given CASP that intends to continue carrying out EMT transactions qualifying as payment services.

Scenario 1: Fully authorised

In this ideal scenario, the CASP has proactively secured its regulatory position. The entity has successfully obtained its own authorisation as a PI or EMI, or it is acting as an official agent of a Payment Service Provider (PSP) that is already authorised to provide the respective services. 

When a CASP partners with a PSP, NCAs are also advised to assess whether that partner PSP itself requires authorisation under Article 59 of MiCA. The action for businesses in this scenario is simple: they are legally permitted to continue their operations and carry out EMT transactions in a manner commensurate with their PSP authorisation.

Scenario 2: Application pending

This scenario covers entities operating in a regulatory grey area. The CASP has submitted a formal license application but has not yet obtained final authorisation as a PI or EMI. The EBA advice dictates that NCAs should allow these entities to continue carrying out EMT transactions, including on a cross-border basis, only if an extremely strict set of conditions is met. These conditions include:

• The application must be duly submitted, and the NCA under PSD2 must have obtained all information and documents required under Article 5 of PSD2 and the relevant EBA Guidelines;
• The information must be provided directly by the applicant or securely obtained by interacting with the NCA under MiCA;
• The applicant must respond to all regulatory queries from the NCA under PSD2 in an exhaustive, transparent, and expeditious manner;
• The NCA under PSD2 must have comprehensively checked that the applicant has not been subject to any supervisory measures;
• The applicant must not have infringed any requirements under MiCA, national Virtual Asset Service Provider regimes, or broader EU laws such as anti-money laundering regulations;
• Based on a preliminary assessment, the NCA must have reasonable grounds to expect that the application will be formally approved within a very short timeframe.

It is important to note that a positive preliminary assessment does not prevent the NCA from eventually rejecting the application. Furthermore, entities allowed to operate under this pending status face severe operational restrictions. 

These entities must immediately cease all marketing activities related to EMTs that qualify as a payment service. Crucially, they must also completely stop onboarding any new clients for services involving EMTs that qualify as a payment service until they are fully authorised. 

NCAs under PSD2 are instructed to coordinate the imposition of these operational restrictions directly with the NCAs under MiCA.

Scenario 3: No application

This scenario represents a failure to comply. It applies when the CASP has not submitted a valid application, or when it has submitted an application but has failed to meet one or more of the stringent preliminary checks and conditions articulated in the second scenario. 

The consequence for falling into this category is absolute. The EBA advises NCAs, acting in coordination with MiCA authorities and other national enforcement bodies, to require the CASP to immediately cease the activity of providing EMT services that qualify as a payment service under PSD2. 

Furthermore, these non-compliant entities will be mandated to actively offboard all existing clients utilising EMT services that qualify as a payment service, effective strictly as of 2 March 2026.

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National exceptions and the July 2026 buffer

While the overarching European deadline is set for March 2026, the legislative framework provides certain structural nuances that sophisticated businesses can leverage. You must consider that some entities may benefit from specific national transitional regimes established under Article 143(3) of the MiCA regulation.

The severe restrictions, including the mandate to cease operations and offboard clients, do not universally apply to crypto-asset service providers that are explicitly permitted under national law transposing Article 143(3) of MiCA. These specifically designated entities are granted an extended runway to secure their required authorisations, potentially allowing them to continue providing their services until 1 July 2026. This extended period will end on 1 July 2026, or on the date on which such entities are either granted or refused authorisation pursuant to Article 63 of MiCA, whichever event occurs earlier.

This provision creates a highly valuable, localised buffer for businesses operating within accommodating jurisdictions. LegalBison can expertly verify if your target jurisdiction, such as Lithuania, Poland, or the Czech Republic, offers this extended regulatory buffer, allowing your business to strategically plan its compliance roadmap without facing immediate operational shutdown.

Strategic solutions with LegalBison

The expiration of the NAL transition period is an imminent operational hurdle. Failing to secure the correct licensing or operational partnerships will result in the forced cessation of highly profitable EMT payment services. 

To ensure your business smoothly navigates the intersection of MiCA and PSD2, LegalBison provides comprehensive, tailored strategic legal solutions designed for the modern crypto enterprise.

Our dedicated teams can assist your business through the following strategic pathways:

• Getting licensed: We provide end-to-end assistance with urgent PI or EMI license applications in fast-track jurisdictions, ensuring your documentation is exhaustive, transparent, and built to withstand rigorous NCA scrutiny;
• Agent model: We offer precise strategic guidance on becoming an official registered agent of an existing, fully authorised PSP, allowing you to meet PSD2 requirements and continue EMT transactions immediately while bypassing the lengthy timeline of a direct license application;
• Company formation: We handle the complete corporate structuring process, setting up new corporate entities in forward-thinking jurisdictions where the financial regulator is well-equipped and historically proven to handle the complex MiCA and PSD2 overlap efficiently. 

The regulatory window is closing rapidly. Crypto businesses transacting in EMTs must evaluate their current operational models and secure their authorisation strategy before the March 2026 deadline forces an abrupt halt to their payment services. Ensure your compliance and protect your market share by addressing your PSD2 obligations today.

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Reference:

(1) https://www.eba.europa.eu/