Key Notes
- Current European Banking Authority guidance could force a regulatory cliff-edge in March 2026 when new payment services requirements take effect.
- Circle CEO Jeremy Allaire endorsed the warning, calling it a critical moment for regulatory simplicity in Europe's stablecoin market.
- Patrick Hansen proposes extending the transition period to 2027 and adding targeted carve-outs in upcoming PSD3 legislation.
Patrick Hansen, Circleโs Senior Director of EU Strategy and Policy, warned that unresolved conflicts between European crypto regulations could create significant compliance burdens for stablecoin service providers.
Hansen posted the warning on X on Oct. 31, stating the issue remains unaddressed as the year nears its end.
Businesses handling e-money tokens could face requirements for both a Markets in Crypto-Assets service provider license and a payment services license for identical custody or transfer activities starting in March 2026, according to Hansenโs analysis of current European Banking Authority guidance.
The overlap stems from how regulators interpret the relationship between MiCA and the Payment Services Directive.
๐๐ก๐ ๐๐ ๐ซ๐ข๐ฌ๐ค๐ฌ ๐ ๐ฆ๐๐ฃ๐จ๐ซ ๐ซ๐๐ ๐ฎ๐ฅ๐๐ญ๐จ๐ซ๐ฒ ๐จ๐ฐ๐ง ๐ ๐จ๐๐ฅ ๐๐จ๐ซ ๐ฌ๐ญ๐๐๐ฅ๐๐๐จ๐ข๐ง๐ฌ ๐ช๐บ
Weโre nearing year-end โ and the MiCA โ PSD2 overlap for stablecoin custody and transfers is still left unaddressed. This could become a serious bottleneck for (euro)โฆ pic.twitter.com/WB81CEvdLZ
โ Patrick Hansen (@paddi_hansen) October 31, 2025
Hansen argued this arrangement contradicts the EUโs MiCA framework , which was designed to provide unified rules rather than duplicate existing requirements.
He stated the situation violates core European Union principles of proportionality and legal clarity. Circle employs Hansen to lead regulatory strategy across Europe, where the company issues euro-denominated stablecoins.
Circle CEO Jeremy Allaire supported Hansenโs assessment on the same day, calling it a key moment for regulatory simplicity. Allaire founded Circle and leads the companyโs global stablecoin operations.
Europe on the brink, key moment to get things right on regulatory simplicity and uniformity for stablecoin issues and firms dealing with them. https://t.co/5bOW8OK1CG
โ Jeremy Allaire โ jda.eth / jdallaire.sol (@jerallaire) October 31, 2025
Circle Executive Flags Regulatory Conflict
Hansen warned that Crypto-Asset Service Providers may withdraw from custody and transfer services if forced to obtain dual authorizations.
He stated this could slow euro stablecoin adoption and potentially push users toward unbacked crypto assets.
Multiple firms have invested significant resources in securing MiCA licenses to operate across the European Economic Areaโs 30 member states.
Proposed Solutions to Prevent Market Impact
Hansen proposed two specific fixes to address the regulatory overlap. The first involves extending the transition period for existing service providers to at least 2027, avoiding the March 2026 deadline.
The second calls for amendments to the Payment Services Directive 3 legislation, adding targeted carve-outs or cross-references so e-money token activities fall exclusively under MiCA supervision.
The regulatory uncertainty affects firms across Europeโs digital asset sector. Companies including Gate Technologyโs MiCA approval in Malta have worked to comply with the new framework, which became the worldโs first comprehensive crypto asset regulation when it took effect in 2023.
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