Winston & Strawn Expands London Office with Addition of Financial Regulation Partner Yulia Makarova

Winston & Strawn has added Yulia Makarova as a partner in its London office, enhancing its capabilities in financial regulation. Makarova brings extensive experience in advising innovative businesses on complex financial regulatory matters across the UK, EU, and globally. Her expertise includes regulatory licensing, MiCA, MiFID II, PSD2/PSD3, and the Electronic Money Regulations.

On 10 June 2025, the European Banking Authority (EBA) issued a No Action letter to clarify the interplay between the Markets in Crypto-Assets Regulation (MiCA) and the Payment Services Directive 2 (PSD2) in relation to crypto asset service providers (CASPs) that transact electronic money tokens (EMTs) [1]. The letter provides guidance to national competent authorities (NCAs) on how to handle the authorization and supervision of CASPs offering services related to EMTs.

Key Points from the No-Action Letter:

1. Interim Period: The EBA advises NCAs to consider the transfer of crypto assets as a payment service under PSD2 where they entail EMTs and are carried out by entities on behalf of their clients. This includes regarding the custody and administration of EMTs as a payment service under PSD2 and considering a custodial wallet as a payment account under PSD2 if it allows for sending and receiving EMTs.

2. Authorization: NCAs are advised to require authorization under PSD2 for these services, utilizing streamlined procedures that make maximum use of information already provided during the CASP authorization under MiCA. However, NCAs are given a transition period until 1 March 2026 before the authorization needs to be held.

3. Post-Transition: After 1 March 2026, NCAs are advised to prevent entities that are not licensed as a payment services provider (PSP) or have not entered into a partnership with a PSP from providing services related to EMTs that qualify as a payment service.

4. Supervision: The letter advises NCAs not to prioritize the supervision and enforcement of some PSD2 provisions (such as safeguarding) while insisting on others (such as strong customer authentication for accessing custodial wallets and the initiation of EMT transfers).

5. Excluded Services: The 'exchange of crypto-assets for funds' and 'exchange of crypto-assets for other crypto-assets' as defined in MiCA are not deemed to be payment services and are not subject to PSD2 provisions.

Implications for Financial Regulation:

The EBA's No Action letter provides crucial regulatory clarity for CASPs operating in the EU. It aligns the regulatory treatment of crypto assets with the existing framework for payment services, ensuring that providers offering services related to EMTs comply with the same standards as traditional payment service providers.

Looking Ahead:

For the long term, the EBA advises the Commission, Council, and European Parliament to use the legislative process of PSD3/PSR to amend relevant provisions in MiCA or to specify which types of EMTs these legal texts apply to and how they apply [1].

References:

[1] https://www.regulationtomorrow.com/the-netherlands/crypto-assets-the-netherlands/eba-no-action-letter-on-the-interplay-between-psd2-3-and-mica/