Which Payment Services do Crypto Custodians Provide with EMT?

Since the end of last year, the custody of crypto assets has been regulated as a crypto asset service in the Markets in Crypto Assets Regulation (MiCAR). Providers of this service must obtain a license in accordance with Art. 63 MiCAR from their competent supervisory authority—in Germany BaFin— prior to being permitted to hold crypto assets for clients. With such a license, crypto custodians are authorized to hold all tokens for clients that qualify as crypto assets under MiCAR. In addition to traditional crypto assets such as Bitcoin and Ether, this also includes special forms of crypto assets regulated by MiCAR, such as asset-referenced tokens (ART) and e-money tokens (EMT). Both of the aforementioned types of so-called stablecoins are characterized by the fact that they are designed to achieve value stability by referring to another stable value. In the case of ART, the reference value may be derived from other official currencies, securities, other crypto assets, or other items. If, on the other hand, the reference value of the token is a single official currency such as the euro, US dollar, or Swiss franc, for example, the token is classified as an EMT. Crypto custodians face additional regulatory issues when storing e-money tokens for their customers, as e-money tokens are not only classified as crypto assets under MiCAR, but also as e-money within the meaning of the Second E-Money Directive (2009/110/EC) applicable in the European Union. As a result, they are also considered funds within the meaning of the second Payment Services Directive (PSD2), as recently confirmed once again by the European Banking Authority (EBA).

Crypto Custodians Will Forthcoming Require Permission Under the ZAG for Handling E-Money Tokens in Business

In its no-action letter dated June 10, 2025, the EBA advises the supervisory authorities of the member states to only require market participants to comply with the regulatory obligations under PSD2, which are implemented in Germany in the Payment Services Supervision Act (ZAG), after March 2, 2026. However, crypto custodians who wish to offer their customers the custody of e-money tokens should already start preparing for the second stage following March 2, 2026, and apply for a ZAG license. The EBA advises supervisory authorities to deprioritize some of the obligations imposed on payment service providers. However, the basic additional licensing requirement still applies in all cases. Crypto custodians who also want to offer their customers the option of keeping EMT in their wallets and sending it to other wallets or receiving EMT from other wallets will then also be providing payment services. In these cases, the payment services of the deposit business (Section 1 (1) sentence 2 no. 1 ZAG) and the withdrawal business (Section 1 (1) sentence 2 no. 2 ZAG) are particularly relevant. Payment transactions pursuant to Section 1 (1) sentence 2 no. 3 ZAG and payment transactions involving the granting of credit pursuant to Section 1 (1) sentence 2 no. 4 ZAG may also be relevant if crypto custodians send EMT from customers to other wallets.

What Are the Alternatives for Crypto Custodians to Obtaining Their Own ZAG License?

Applying for a separate license under Section 10 (1) ZAG for the provision of payment services does not make sense in every case. In individual cases, crypto custodians may have problems with the fact that their managers may have the professional qualifications for crypto custody, but may not yet have professional experience in the payment services business. It is not unlikely that BaFin will require the management to be changed or expanded to include qualified managers with ZAG experience in the relevant licensing procedures. In such cases, it may be possible to have the additional payment services arising in connection with the custody of e-money tokens provided by another institution, for example, via an outsourcing solution. In this case, it is not necessary to obtain a separate license for the provision of payment services. If the crypto custodian wishes to offer payment services to its customers itself, it may also consider whether the crypto custodian should become a payment agent for the other payment institution. It can then perform the regulated payment services on behalf of the other institution as an independent trader. Its actions are then attributed to the payment institution for supervisory and civil law purposes.

Attorney Dr. Lutz Auffenberg, LL.M. (London)

I. https://fin-law.de

E. info@fin-law.de