Circle Warns EU Stablecoin Rules Risk Dual Licensing by March 2026

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Patrick Hansen, Circle’s Senior Director of EU Strategy and Policy, issued a heartfelt warning that unresolved conflicts between European crypto regulations could soon become the regulatory equivalent of an overstuffed suitcase-too much to handle. For stablecoin service providers, this could mean compliance burdens so heavy, they might consider switching to a career in interpretive dance just to escape it.

Hansen made this announcement on X (yes, that’s still what we’re calling Twitter) on October 31, reminding us that the ticking clock on 2025 doesn’t just signal the end of the year, but possibly the end of sanity for those in crypto regulation.

According to Hansen’s analysis of the European Banking Authority’s current guidance, businesses dealing with e-money tokens could soon face the regulatory equivalent of a double whammy-both a Markets in Crypto-Assets (MiCA) service provider license and a payment services license for the same custody or transfer activities starting in March 2026. Yes, that’s right, double the paperwork, double the fun! 🎉

The cause of this confusion? Well, it’s the way regulators are interpreting the relationship between MiCA and the Payment Services Directive (PSD2), which, as you might guess, isn’t exactly making anyone’s life easier.

𝐓𝐡𝐞 𝐄𝐔 𝐫𝐢𝐬𝐤𝐬 𝐚 𝐦𝐚𝐣𝐨𝐫 𝐫𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐨𝐰𝐧 𝐠𝐨𝐚𝐥 𝐟𝐨𝐫 𝐬𝐭𝐚𝐛𝐥𝐞𝐜𝐨𝐢𝐧𝐬 🇪🇺

We’re nearing year-end – and the MiCA ↔ PSD2 overlap for stablecoin custody and transfers is still left unaddressed. This could become a serious bottleneck for (euro)…

– Patrick Hansen (@paddi_hansen) October 31, 2025

In other words, European regulators are playing a game of “Who’s on first?” with their own rules, and no one is particularly happy about it.

Hansen, who is paid handsomely by Circle to wrangle regulatory strategy across Europe, argued that this situation is a glaring contradiction to the very reason MiCA exists-to provide unified rules, not duplicate those already in place. It’s like buying a fancy new blender that, instead of blending, just creates more mess. A little counterproductive, wouldn’t you say?

But the fun doesn’t stop there! Circle CEO Jeremy Allaire, who’s seen this kind of thing before (he founded Circle, after all), echoed Hansen’s concerns. Allaire called this a “key moment for regulatory simplicity,” though it might be more of a “key moment to rethink the entire European regulatory approach” situation. Who’s counting?

Europe on the brink, key moment to get things right on regulatory simplicity and uniformity for stablecoin issues and firms dealing with them.

– Jeremy Allaire – jda.eth / jdallaire.sol (@jerallaire) October 31, 2025

In short, the European Union might be heading towards a major regulatory crisis, with Circle’s Hansen warning that Crypto-Asset Service Providers might just pack up and leave if they’re forced to get dual licenses for the same activities. You know, like being asked to carry two umbrellas on a sunny day-totally unnecessary and a bit much.

He also pointed out that this regulatory mess could slow the adoption of euro-backed stablecoins (sad face 😞) and might even push users toward unbacked crypto assets. Because who doesn’t love a little wild west when it comes to financial stability?

Some companies, such as Gate Technology in Malta, have poured significant resources into securing MiCA licenses to operate across the European Economic Area’s 30 member states. And now, they might be looking at a regulatory double-take, wondering if their next move should be packing up for a tax haven.

Circle Executive Flags Regulatory Conflict

Hansen’s dire warning suggests that if this mess isn’t fixed soon, crypto firms may just pull the plug on providing custody and transfer services altogether. After all, who wants to spend the next few years juggling a pair of licenses like an overzealous juggler at a circus?

He further argued that such a situation could lead to the dreaded “slowing of euro stablecoin adoption” (gasp!) and even push users toward unbacked assets. You know, because why not go full crypto cowboy when you can?

Proposed Solutions to Prevent Market Impact

Hansen isn’t just sitting around complaining-he has solutions, like any good problem-solver. The first fix involves pushing back the transition period for existing service providers to at least 2027. After all, March 2026 is still too close for comfort, and there’s no need to rush into a regulatory disaster, right?

The second solution? Amend the Payment Services Directive 3 legislation to add some much-needed carve-outs or cross-references, so that e-money token activities fall exclusively under MiCA supervision. Simple, right? Probably not, but we can dream.

The regulatory uncertainty currently swirling through Europe’s digital asset sector has left many companies scrambling, including those who have worked hard to get MiCA approval in places like Malta. Their reward? A regulatory maze that could lead to a dead end if this issue isn’t sorted.

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2025-10-31 19:29