What an EMI Licence Covers
The Electronic Money Directive 2 (EMD2, Directive 2009/110/EC) establishes the EU framework for electronic money institutions. EMD2 replaced the original EMD1 in 2011, significantly reducing capital requirements and expanding the scope of permitted activities to better accommodate the fintech ecosystem that was emerging at the time.
An EMI is authorised to issue electronic money — defined as electronically stored monetary value representing a claim on the issuer, issued on receipt of funds, for the purpose of making payment transactions. In practical terms, this covers e-wallets, prepaid accounts, virtual IBANs, and any digital store of value that can be used for payments.
Beyond e-money issuance itself, EMIs can also provide all payment services listed in Annex I of PSD2: credit transfers, direct debits, card issuance, payment initiation services, and account information services. This makes the EMI licence a comprehensive payment services authorisation that covers virtually every type of payment product a fintech company might want to offer.
Crucially, EMIs cannot accept deposits. Funds received in exchange for e-money are not deposits — they are e-money obligations. This distinction is critical: accepting deposits requires a full banking licence with substantially higher capital requirements (minimum €5 million under the CRD). EMIs must also safeguard all client funds, ensuring they are protected in the event of insolvency.
Activities Permitted Under EU EMI Licence
Safeguarding Requirements Under EMD2
One of the most important regulatory obligations for EMIs is client fund safeguarding. Under EMD2 Article 7, EMIs must safeguard all funds received in exchange for e-money issued. This means client funds must be segregated from the EMI's own business funds at all times and protected in the event of the EMI's insolvency.
There are two main safeguarding methods. Method 1 (Segregated Account): the EMI places client funds in a separate bank account at an authorised credit institution, clearly designated as holding funds for the EMI's payment service users. Method 2 (Insurance/Guarantee): the EMI obtains insurance or a guarantee from an insurance company or credit institution covering the full amount of funds that need to be safeguarded.
In practice, most EMIs use Method 1 — a segregated account at a major bank. The challenge has been that many Tier 1 banks are reluctant to open segregated accounts for EMIs without substantial due diligence. This is why choosing a jurisdiction with a well-developed EMI ecosystem (Lithuania, Estonia) significantly reduces the time and cost of obtaining compliant banking arrangements.
Key rule: Safeguarded funds must be placed in a segregated account by end of business on the day following receipt. Any shortfall in safeguarding is a regulatory breach reportable to the home authority. EMIs must reconcile safeguarded amounts daily.
EU EMI Jurisdictions — Full Comparison 2025
| Country | Regulator | Min Capital | Timeline | Gov. Fee | Corp. Tax | Difficulty |
|---|---|---|---|---|---|---|
| Lithuania | Bank of Lithuania | €350,000 | 3–6 months | ~€1,800 | 15% | Low–Med |
| Estonia | Finantsinspektsioon | €350,000 | 6–9 months | ~€3,300 | 0% retained | Medium |
| Cyprus | Central Bank of Cyprus | €350,000 | 6–9 months | ~€5,000 | 12.5% | Medium |
| Netherlands | De Nederlandsche Bank | €350,000 | 6–9 months | ~€6,000 | 25.8% | Medium |
| Malta | MFSA | €350,000 | 6–12 months | ~€5,000 | 5% effective | Medium |
| Ireland | Central Bank of Ireland | €350,000 | 9–18 months | ~€10,000 | 12.5% | Med–High |
| Czech Republic | Czech National Bank | €350,000 | 6–12 months | ~€3,000 | 21% | Medium |
| UK (post-Brexit) | FCA | £350,000 | 12–18 months | £5,000 | 25% | High |
EU vs Non-EU EMI: Key Differences
The choice between an EU and non-EU EMI-equivalent licence is primarily driven by where your clients are located and what payment infrastructure you need to access. EU EMI licences are the gold standard for European market access, but non-EU licences serve specific market needs.
EU EMI licences (any EEA country) provide full passporting rights, meaning a single licence covers payment services across all 30 EEA states. This is particularly valuable for businesses targeting multiple European markets — they avoid the need to obtain separate licences or register locally in each country. EU EMIs also benefit from SEPA membership, enabling low-cost euro payments across the eurozone.
The UK's post-Brexit EMI licence is governed by the Payment Services Regulations 2017 (PSR 2017) and UK Electronic Money Regulations 2011. While the requirements are broadly equivalent to EU standards, UK EMIs lost EU passporting rights in January 2021. Companies wanting to serve both UK and EU markets must now obtain two separate licences.
How to Choose the Right EU Jurisdiction
The optimal EU jurisdiction for your EMI licence depends on several factors: your timeline, tax efficiency goals, local presence requirements, existing team location, and the nature of your crypto or fintech business model.
Lithuania is the default choice for most crypto and fintech startups seeking fast EU EMI access. The Bank of Lithuania's VILN programme has processed more EMI applications than any other EU regulator, creating a mature ecosystem of compliance consultants, local directors, and banking partners who specialise in supporting new EMI licensees. The 15% corporate tax rate and comparatively low operating costs make Lithuania an efficient base.
Estonia is particularly strong for digital-first fintechs that want to combine an EMI licence with e-Residency and a fully digital company structure. Finantsinspektsioon has developed expertise in technology-driven payment companies and the 0% tax on retained profits makes it attractive for growth-stage companies reinvesting revenue.
Cyprus and Ireland (both 12.5% corporate tax) are preferred by companies that need the tax efficiency of Ireland or Cyprus combined with a strong EU brand. Ireland is especially popular with US companies expanding to Europe, given the English common law system and the presence of major tech company headquarters. Cyprus is popular for companies already using CySEC for investment services licensing who want to add payment capabilities.
Malta is the choice for gaming industry crossover businesses — Malta's gaming licence (MGA) and EMI licence combination is well-established and MFSA has specific expertise in gaming-related payment flows.