PSD3, Again

Okay, okay, it's for real this time. The Council of the EU has published its position at first reading with a view to the adoption of the new Directive (PSD3) and the Regulation (PSR) on payment and electronic money services. Aside from the departures from PSD2/EMD2, most of which I explained in April and some house-keeping/tidy up, there are only a few substantive changes from the April versions, which I have noted below. This post is for information purposes. If you'd like legal advice, please let me know (via Crowley Millar in Ireland, as this would be EU-related work).

PSD3  

The definitions have been relocated to the PSR, so they're all in the one place and there is harmony by way of direct application, reducing the possibility of subtle changes through the process of national implementation in various different languages.

MiCA will have an additional exclusion to mitigate the potential overlap, which has been relocated from the PSR to PSD3. For those also trading in the UK, the EU position is worthwhile calling out in more detail since the FCA has begun issuing its own interpretive guidance on UK Cryptoasset Regulation as well as being mid-consultation on its changes to e-money/payments regulation. Under MiCA/PSD3, a payment institution will be able to provide crypto-asset services in relation to e-money tokens for the purposes of providing payment services, where such crypto-asset services are 'deemed equivalent' to the payment services for which the payment institution has been authorised under PSD3, so long as the firm notifies its home state regulator of certain information at least 40 working days before providing those crypto-asset services for the first time. For these purposes, the following MiCA-activities and PSD3-activities are 'deemed equivalent': 

• "providing custody and administration of crypto-assets on behalf of clients" and "the payment service of enabling cash to be placed on or withdrawn from a payment account";  

• "the exchange of crypto-assets for funds and other crypto-assets" and "the payment service of execution of payment transactions"; 

• "providing transfer services for crypto-assets on behalf of clients" and "the payment service of execution of payment transactions"; 

• "the execution of orders for crypto-assets on behalf of clients" and "the payment service of execution of payment transactions".

PSR

The European Commission has must report on certain aspects of the payments market within a series of timeframes ranging from 18 months to 7 years, which indicates areas for further change in due course. I won't summarise those here, but it would be important for businesses operating within the scope of exclusions or close to the regulatory perimeter to consider that list.

This post is for information purposes. If you'd like legal advice, please let me know (via Crowley Millar in Ireland, as this would be EU-related work).