Cyprus Central Bank Aligns with EBA No-Action Letter on CASPs and E-Money Tokens, February 2026

On 3 February 2026, the Central Bank of Cyprus (CBC) published an announcement responding to the European Banking Authority's No Action letter of 10 June 2025 on the interplay between Directive 2015/2366/EU (PSD2) and Regulation (EU) 2023/1114 (MiCA). The CBC announcement addresses the obligations of crypto-asset service providers (CASPs) that transact electronic money tokens (EMTs) and clarifies the supervisory approach applicable in Cyprus following the expiry of the transition period on 2 March 2026.

The controlling authority is the EBA No Action letter issued under Article 9c of Regulation (EU) No 1093/2010, alongside MiCA (Regulation (EU) 2023/1114, Articles 3 and 4 defining EMT and CASP categories) and PSD2 (Directive 2015/2366/EU). The No Action letter advised national competent authorities to require PSD2 authorisation from CASPs transacting EMTs only from 2 March 2026 onwards, using streamlined procedures that draw on information already provided in CASP applications, and to deprioritise certain PSD2 provisions — specifically safeguarding, consumer charge disclosures, IBAN-linked unique identifiers, and open banking — while enforcing strong customer authentication, fraud reporting, and own funds requirements.

The CBC announcement affects every CASP licensed in Cyprus or serving Cypriot clients that handles EMTs as part of its activities. These CASPs must assess whether their operations constitute payment services under PSD2 — specifically, custody and administration of EMTs in wallets held in the name of one or more clients that allow sending and receiving EMTs to and from third parties. Those meeting that definition must seek Payment Institution or Electronic Money Institution authorisation under PSD2, unless their operations fall within the categories that the EBA has advised NCAs not to treat as payment services: exchange of crypto-assets for funds, exchange of crypto-assets for other crypto-assets, or intermediation in the purchase of crypto-assets with EMTs.

The EBA's No Action letter does not exempt CASPs from PSD2 on a permanent basis; it reflects a transitional acknowledgement that dual authorisation would impose disproportionate burdens. The European Commission is expected to address the long-term interplay through forthcoming PSD3 and Payment Services Regulation texts. CASPs that obtained MiCA authorisation before 2 March 2026 were advised to initiate PSD2 authorisation through streamlined procedures drawing on their existing MiCA compliance records.

Our firm advises CASPs, electronic money institutions, and payment service providers on MiCA licensing, PSD2 authorisation pathways, and dual-authorisation strategy in Cyprus and across EU member states. We maintain a dedicated partner network to assist with national competent authority engagement and cross-border compliance planning. Practitioners working on crypto regulatory licensing, CASP authorisation, EMT classification, payment institution licensing, MiCA compliance, and related mandates are encouraged to reach out.

Source: EBA, Opinion on the interplay between Directive EU 2015/2366 (PSD2) and Regulation (EU) 2023/1114 (MiCA) in relation to crypto-asset service providers that transact electronic money tokens, 10 June 2025, https://www.eba.europa.eu/publications-and-media/press-releases/eba-publishes-no-action-letter-interplay-between-payment-services-directive-psd23-and-markets-crypto; Central Bank of Cyprus, MiCAR page, https://www.centralbank.cy/en/licensing-supervision/micar-markets-in-crypto-assets-regulation (confirmed 1 April 2026).

The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.