If you’re interested in providing payment services in either fiat currency or cryptocurrency to European clients, an EMI (Electronic Money Institution) license is an excellent and comprehensive choice. EMI licenses have become increasingly popular with the rise of numerous online banks and payment service providers. In fact, an EMI license is one of the most extensive licenses available for online banks or payment service providers, second only to a full banking license.
Clearsky Network’s legal and commercial team offers a one-stop solution for clients interested in obtaining these licenses.
EMI licenses can be obtained in any EU member state. Once a license is secured in one country, it can be easily passported across the EU without the need for additional regulatory approvals. The regulatory framework for EMIs is governed by the E-Money Directive (EMD), which is publicly accessible.
An EMI license enables the license holder to conduct the following activities:
- Issuance and transmission of e-money
- Money remittance
- Safekeeping of funds
- Crypto assets transmission and safekeeping
- Issuance of payment cards (non-credit)
- Providing segregated, individual IBANs (International Bank Account Numbers) for clients
- Cash deposits and withdrawals
- Currency (and cryptocurrency) exchange
The main limitations of EMIs pertain to credit provision and loans, which they are not authorized to offer. Additionally, while EMIs can provide IBAN accounts for their clients, they are not always the direct issuer of these IBANs. Only EMIs that are direct SEPA members can issue IBANs directly. Otherwise, they must rely on another SEPA member bank or EMI, which may be less favorable due to dependency on external policies and priorities. For solvent EMIs that actively provide payment services and meet capital and regulatory requirements, becoming a SEPA participant is advisable.
It’s important to note the distinction between an IBAN and a traditional bank account. Unlike a bank account, an IBAN issued by an EMI cannot receive deposits and does not offer deposit guarantees.
A critical decision for future EMI license holders is selecting the appropriate EU member state for setting up the company and applying for the EMI license. Although the license is fully passportable, the choice of jurisdiction is significant as it will influence:
- The spoken language
- The regulatory environment for reviewing and approving the license application—while all EU regulators operate under the Pan-EU EMD/EMD2 framework, each has its own approach and methods. Some regulators may be more familiar with and open to innovative products and services than others.
- The costs associated with local directors and employees’ salaries
- The cost of maintaining a local office
- The speed of license application review and subsequent communications with the regulator
Another essential factor to consider is the local banking environment and its willingness to work with EMIs, particularly if the EMI is not a SEPA member. Even SEPA-member EMIs may need to maintain corporate bank accounts in the licensing jurisdiction for capital deposits and potential access to loans or credit.
How Clearsky Network Can Help:
- Application Process and License Issuance**: Our expert commercial and regulatory legal teams manage the entire licensing process, including market research, strategic connections, and project management during the licensing phase.
- Legal, Regulatory, and Compliance Support Post-Licensing**: Our commercial and regulatory departments provide ongoing legal and regulatory assistance after the license is issued.
- Project Management Pre- and Post-Licensing**: We manage local legal and accounting teams, local directors, and other officers required for the application, licensing, and ongoing operations of the EMI.
- Connections and Added Value**: We assist with connections to liquidity providers, required technologies, acquiring banks for ongoing EMI operations, and potential referrals of high-volume clients/merchants.
Want to know more about Electronic Money Institution (EMI) Licenses ? Contact us today
