Regulatory Radar

Regulatory Radar #1

Daphnée Papiasse

June 16, 2025

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Welcome to the first edition of Regulatory Radar—a space for short, sharp insights into the rules, tools, and trends shaping financial regulation!

We’re starting with a timely topic: the no-action letter—a somewhat obscure but important regulatory instrument used by European Supervisory Authorities (ESAs). On 10 June 2025, the European Banking Authority (EBA) issued a no-action letter addressing the interaction between PSD2 and MiCA—marking the first time this tool has been used to navigate the complex overlap between legacy payments regulation and Europe’s new crypto framework.

But what exactly is a no-action letter in the EU context? Who can issue one? What’s its legal weight? And why should market participants and policymakers alike pay attention?

Let’s take a closer look.

‍Which EU supervisory authorities can issue a no-action letter?

Following the 2019 ESA Reform Regulation, all European Supervisory Authorities (ESAs) were given the authority to issue no-action letters:

What is the legal basis of a no-action letter?

The legal basis of a no-action letter differs across the European Supervisory Authorities:

European Banking Authority (EBA): Article 9c of EBA’s founding regulation - Regulation (EU) 1093/2010 - grants the EBA the authority to expeditiously issue no-action letters
European Securities and Markets Authority (ESMA): Article 9a of ESMA’s founding regulation - Regulation (EU) 1095/2010 - grants the ESMA the authority to expeditiously issue no-action letters.
European Insurance and Occupational Pensions Authority (EIOPA): Article 9a of EIOPA’s founding regulation - Regulation (EU) 1094/2010- grants the EIOPA the authority to expeditiously issue no-action letters.

The EBA, ESMA and EIOPA may equally participate in joint ESA no-action letters as was the case in December 2023 on EMIR Margin Requirements.

Specifically, on essentially the same terms, the EBA, ESMA, and EIOPA may issue a no-action letter in the following three circumstances:

Provisions contained in a relevant EU Legislative act may directly conflict with another relevant EU legislative act.
The absence of delegated or implementing acts that complement or specify a legislative act raises legitimate doubts concerning the legal consequences from the legislative act or its proper application.
The absence of EBA guidelines or recommendations would raise practical difficulties concerning the application of the relevant legislative act.

What is the aim of an ESA no-action letter?

In the European Union, no-action letters are not addressed to individual firms, but rather address an issue affecting the market as a whole. The pattern across ESAs suggests that only exceptional, systemic regulatory conflicts, as opposed to firm-specific or minor compliance issues, have triggered the issuance of no-action letters.

No-action letters issued by ESAs do not change EU law but they provide interim guidance to regulators and market participants on how to handle problematic provisions until a more permanent solution is in place.

Usually addressed primarily to all national regulators in the EU, this interim guidance may provide :

‍Short-term non-supervisory or non-enforcement guidance :

A no-action letter may state that no supervisory or enforcement actions should be taken against firms for non-compliance with specified provisions, for a limited time or until certain conditions are met.
A no-action letter may outline supervisory expectations during an interim period when the timing of implementation or the scope of two regulatory regimes are misaligned.

‍Long-Term legislative action :

ESAs may issue a public opinion to the European Commission (EC) on any action it considers appropriate, in the form of a new legislative proposal or a proposal for a new delegated or implementing act, and on the urgency that, in the Authority’s judgment, is attached to the issue.
ESAs may equally evaluate as soon as possible the need to adopt further relevant guidelines or recommendations that do not warrant further legislative action.
Each no-action letter issued by ESAs so far has been accompanied by outreach to the European Commission.

‍Is a no-action letter legally binding?

A no-action letter is delivered as an opinion (soft-law) and is therefore not legally binding on relevant National Competent Authorities (NCAs) or firms operating in the EU. The ESAs’ respective Founding Regulations do not grant ESA’s authority the power to disapply or suspend the law.

However, a no-action letter constitutes an important precedent - NCAs have strong incentives to follow the guidance to maintain a level-playing field and avoid fragmentation.

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Welcome to Kulipa's Regulatory Radar #4! In this Regulatory Radar, the third of our dedicated series on US digital asset developments, we delve into reactions of key EU institutions - ECB, EC, and EP - following the landmark vote of the GENIUS Act.

The recent passage of the U.S. GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) has sent regulatory ripples across the Atlantic. As the U.S. takes a bold step toward stablecoin regulation, European officials are parsing its implications for the EU's digital finance strategy. This post summarizes the reactions from Brussels and other EU institutions, and what they could signal for the future of transatlantic crypto policy.

Brussels Watches Closely: Strategic Opportunity or Regulatory Risk?

Following the enactment of the GENIUS Act, which establishes a comprehensive framework for the issuance and oversight of U.S. dollar-backed stablecoins, EU officials have been quick to respond. While there’s a broad consensus that regulatory clarity is welcome, reactions across European institutions reflect a blend of strategic caution and competitive awareness.

European Commission (EC) - Cautious Validation: EC officials welcomed the move in principle. A senior official from DG FISMA noted that the U.S. stablecoin law "reflects a long-overdue commitment to serious digital finance regulation," but cautioned that it may accelerate "regulatory arbitrage pressures in Europe."Internal Commission briefings reportedly highlighted that GENIUS "validates the core logic of MiCA" (the EU’s Markets in Crypto-Assets Regulation) by requiring reserve backing, redemption rights, and prudential oversight for stablecoins. However, there is some concern that the U.S. framework offers "greater operational flexibility" for issuers, which could attract new entrants to the American market.

European Parliament (EP) - Split views : EP members of the Economic and Monetary Affairs (ECON) Committee were split. Some MEPs praised the GENIUS Act as an important move toward global regulatory convergence. Others, particularly from the Greens and center-left S&D groups, expressed fears that the U.S. might become "a permissive haven" for dollar-denominated stablecoins unless supervision is strictly enforced.
The GENIUS Act’s multi-issuance provisions — allowing both bank and non-bank entities to issue stablecoins under specific regulatory conditions — were noted with interest in Brussels. Some policymakers view this as a potential competitive advantage for the U.S. system, given MiCA’s more cautious approach to non-bank issuance.

The ECB Sounds the Alarm: dollarization risk

The most vocal critique came from the European Central Bank. ECB board member Piero Cipollone warned in a recent speech that the GENIUS Act could "turbocharge U.S. stablecoin issuance" and lead to "a gradual dollarization of European digital payments." He called for urgent coordination within the eurozone, saying the ECB must *"not be caught off guard by a wave of dollar-linked assets outpacing the digital euro."

President Christine Lagarde echoed these concerns more diplomatically, stating that while the ECB supports responsible innovation, "the risk of monetary fragmentation is real if non-euro stablecoins dominate retail transactions in Europe."This has reignited debate over MiCA’s adequacy in ringfencing the eurozone against foreign digital currency inflows.

The Transatlantic Outlook: Divergence or Dialogue?

The passage of the GENIUS Act is already influencing how EU officials are thinking about future legislation. One tangible impact: renewed calls within the Commission to reassess MiCA’s thresholds on foreign stablecoin issuance. Some voices within the EC are urging a faster rollout of the digital euro to mitigate dependence on dollar-based tokens.

At the same time, there is cautious optimism that GENIUS might revive stalled talks around U.S.-EU cooperation on crypto supervision. European lawmakers have long pressed Washington to deliver a harmonized framework, and now that one exists for stablecoins, there may be momentum to align supervisory practices.

As one senior MEP put it: "MiCA was first. GENIUS is faster. The question now is: can we meet in the middle before market fragmentation gets worse?"

Final Take

The GENIUS Act’s passage marks a pivotal moment in the global race to regulate digital assets. For the EU, it brings both a challenge and an opportunity: to defend the integrity of its digital currency regime while leveraging this moment to deepen international cooperation. Whether the transatlantic stablecoin landscape will converge or diverge may depend as much on political will as on policy architecture.

Stay tuned for more insights in the next edition of Regulatory Radar!

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