E-Money vs. Crypto: From Contractual Claim to Statutory Redemption Rights

This essay is the third instalment of a series examining the Markets in Crypto-Assets Regulation framework. The first essay analysed the EMT regime through five thematic sections, contrasting MiCAR’s reserve requirements with those of the United States’ GENIUS Act and identifying a regulatory paradox whereby a framework designed to reduce systemic risk may concentrate it within the European banking system. The second essay examined Regulation 2023/1113 on information accompanying transfers of funds, demonstrating how self-hosted wallet requirements effectively route crypto-asset activity through banking-integrated intermediaries. This essay addresses a narrower but equally significant question: how does the legal relationship between an EMT holder and the issuer differ from the relationship governing traditional electronic money?

The distinction matters because it determines when and how a holder may enforce claims against an issuer. Under the Electronic Money Directive, the holder-issuer relationship is contractually constituted. When an individual opens a PayPal account or loads value onto a prepaid card, a contractual relationship emerges binding both parties. The issuer promises to maintain a ledger recording the holder’s balance; the holder agrees to terms of service specifying conditions under which the issuer may deny transactions or impose fees. This contractual architecture reflects the centralised, account-based nature of traditional e-money: the holder’s claim to value exists only insofar as it appears within the issuer’s database and derives from a prior agreement between the parties.

EMTs present a different reality. Distributed ledger technology enables peer-to-peer transfers between wallet addresses without the recipient ever establishing a contractual relationship with the issuer. Consider a practical scenario: an individual acquires Circle’s EURC stablecoin through an exchange without opening any account directly with Circle. The recipient possesses EURC tokens yet has no contractual relationship with Circle itself. Under traditional e-money logic, this scenario should be legally impossible. MiCAR resolves this tension by establishing that EMT holders possess a “legal right to reimbursement” distinct from the contractual claims arising under traditional electronic money relationships. Article 49 of the Regulation provides that EMT holders may request redemption of the monetary value of their tokens from the issuer “at any time” and “at par value“, regardless of whether they have ever contracted with the issuer directly.

Several commentators have addressed this distinction. Hogan Lovells, analysing Case C-661/22, observed that “the minimum requirement for the classification of transferring and holding funds on a payment account as the issuance of e-money is a contractual agreement between the customer and an e-money issuer to issue a separate monetary asset up to the value of those funds“. The Open Review of Management, Banking and Finance noted that “e-money holders always have a claim on the issuer of e-money and have the contractual right at any time to demand redemption of their e-money“, whereas “holders of crypto-assets whose reference currency is an official currency do not always have such a claim against the issuers of such assets“. White & Case summarised the operational consequence: “The issuance and redeemability of EMTs are subject to requirements under the MiCAR and not the EMD“. The shift from contractual claim to legal right of reimbursement thus represents not merely a terminological adjustment but a structural reconceptualisation of the holder-issuer dynamic.

Relevant Case Law of the Court of Justice

The Court of Justice has addressed several questions relevant to the classification of payment accounts and electronic money. While these cases predate MiCAR’s entry into force, they establish the conceptual framework within which the EMT regime operates.

Case C-191/17 (Bundeskammer für Arbeiter und Angestellte (Austria) v. ING-DiBa Direktbank Austria Niederlassung der ING-DiBa AG): The case concerned ING-DiBa Direktbank Austria, which offered online savings accounts that allowed customers to make payments and withdrawals via telebanking, but only through designated reference accounts (current accounts) that could be held at other banks. The Federal Chamber of Workers and Employees challenged certain clauses in ING’s standard terms and conditions as potentially violating Austria’s payment services law (which implemented the EU Payment Services Directive). The key question was whether these online savings accounts qualified as «payment accounts» under Article 4(14) of PSD1, which would determine whether the directive’s requirements applied. The Court established a critical test: the ability to make payment transactions directly to third parties is a defining feature of a payment account. If an account requires an intermediary account to make payments, it cannot qualify as a payment account under the directive.

Case C-245/18 (Tecnoservice Int. Srl (in liquidation) vs. Poste Italiane SpA): The case concerned a payment made by a debtor of Tecnoservice Int. Srl (in liquidation) on August 3, 2015. The debtor initiated a bank transfer using an IBAN as the unique identifier, along with Tecnoservice’s name as the intended recipient. While the transfer was executed to the account matching the provided IBAN, this account belonged to a different entity, meaning Tecnoservice never received the funds. Tecnoservice sued Poste Italiane SpA (the payee’s bank), claiming it was liable for failing to verify whether the IBAN matched the named recipient. The Court examined the literal interpretation of Article 74(2), noting that the term «payment service provider» refers to the payer’s provider rather than the payee’s, thereby limiting the scope of liability for unique identifier discrepancies.

Case C-351/21 (ZG vs. Beobank SA): This case addressed circumstances under which a payment service provider may refuse to execute a payment transaction. The Court clarified that while payment service providers must execute authorised payment transactions in accordance with the payer’s instructions, they retain obligations under anti-money laundering legislation that may justify refusal. The case reinforces the principle that the execution of payment services operates within a framework of both contractual obligations and regulatory requirements.

Case C-661/22 (ABC Projektai UAB (formerly Bruc Bond UAB, vs. Lietuvos Bankas): This case is directly relevant to the contractual requirement for electronic money issuance. ABC Projektai held a payment institution licence and maintained customer funds on payment accounts. The Bank of Lithuania determined that by holding these funds without immediately executing payment transactions, ABC Projektai was issuing electronic money without the required authorisation. The Court established that “in order for an activity to come under the issuance of ‘electronic money’, within the meaning of Article 2(2) of that directive, it is at the very least necessary that there be a contractual agreement between the user and the electronic money issuer under which those parties expressly agree that that issuer will issue a separate monetary asset up to the monetary value of the funds paid by the user“. The Court emphasised that “transferring and holding funds on a payment account without immediately mandating payment transactions up to the value of those funds does not mean that the user of the payment service has given his, her or its express or tacit consent to the issuance of electronic money“. This judgment confirms that under EMD2, electronic money issuance requires express contractual agreement; mere custody of funds does not constitute issuance absent such agreement.

Conclusion

The case law of the Court of Justice establishes that traditional electronic money under EMD2 requires a contractual relationship between holder and issuer. The holder’s claim against the issuer arises from and is defined by that contract. MiCAR departs from this model for e-money tokens.

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Article 49 establishes a legal right to reimbursement that exists by operation of law rather than by contractual agreement. The distinction likely stems from different market expectations: while it is generally accepted that one cannot send money via PayPal to someone without a PayPal account, there is a widespread expectation that a stablecoin like USDT retains its value even for those who are not Tether customers. The holder of an EMT who acquired tokens through secondary market transactions possesses the same redemption rights as one who purchased directly from the issuer. The claim against the issuer arises from the token itself rather than from a contractual account relationship.