Malta: E-Money On The Agenda Of The CJEU

The new year at the Court of Justice of the European Union ("CJEU") kicked off with a head-scratcher – a preliminary ruling concerning electronic money institutions ("EMI(s)"). This case is of particularly relevance to the Maltese market as it highlights a number of key points which are currently being discussed in the context of the soaring fintech wave hovering over our shores.

The preliminary ruling related to the interpretation of Articles 5(2) and 6(1)(a) of the second Electronic Money Directive (Directive 2009/110/EC or "EMD II") in 'Paysera LT' vs. Lietuvos bankas (or Bank of Lithunia)', (Case C-389/17) which articles set out the possible methods of calculating the own funds requirements for EMIs for activities referred to in Article 6(1)(a) EMD II that are not linked to the issuance of electronic money.

Paysera LT, a private company incorporated under Lithuanian law, holds licences issued by Bank of Lithuania to operate as an electronic money institution and a payment institution, under which it is authorised to issue electronic money, to provide services linked to the issuance of e-money, as well as other payment services. Following an inspection of Paysera's operations, the Lithuanian regulator issued a warning to the institution requiring it to remedy an infringement of the regulations pertaining to the calculation of the own funds requirements.

Following a dismissal of Paysera's action against such decision by the Regional Administrative Court in Lithuania, the applicant brought an appeal before the Lithuanian Supreme Administrative Court. The latter court referred a question to the CJEU whether the below activities could be classified as payment services linked to the issuance of e-money under Article 5(2) and 6(1)(a) of EMD II, namely:

  1. redemption at the request of an e-money holder from an e-money account to third-party bank accounts ("Service 1"); and
  2. the collection of payments for goods and services supplied by e-money holders from persons not participating in the e-money system acquiring such goods or services. ("Service 2").

By way of background, the abovementioned Article 5 sets outs the own funds requirements for payment institutions and EMIs. It is pertinent to note that the rules for calculating own funds requirements in the context of payment services are different from the rules on own funds applicable to e-money services. While the own fund rules applicable to payment institutions are divided into three different methods, entailing complicated mathematical and accounting calculations, the fourth method (Method D) applicable to EMIs, is more straightforward and possibly less burdensome than the other three methods. In fact, Method D merely stipulates that the own funds requirements of EMIs must amount to at least 2% of the average outstanding e-money.

In essence, the referring court asked the CJEUwhether Article 5(2) of EMD II must be interpreted as meaning that services provided by EMIs in payment transactions such as, Services 1 and 2, constitute activities linked to the issuance of electronic money or otherwise. The underlying rationale for this preliminary reference is that Article 5 of EMD II creates an exception to the rules on own funds laid down by Directive 2007/64 ("PSD I") for payment services linked to the issuance of e-money provided, in so far as those services are linked to the activity of issuing e-money. Therefore, if the payment services are considered to be linked to the issuance of e-money, Paysera LT would fall under the scope and be subject solely to Method D, applicable to EMIs.

In order to determine whether the services in question constitute activities linked to the issuance of e-money, it is necessary to determine whether those services are inherently linked to the issuance or redemption of electronic money. In its judgement, the CJEU decided that Article 5(2) of Directive 2009/110 must be interpreted as meaning that services provided by EMIs in payment transactions such as Services 1 and 2 constitute activities linked to the issuance of e-money, if those services trigger the issuance or redemption of e-money in a single payment transaction.

The question whether the payment services at issue trigger issuance or redemption of e-money is a matter which is to be ascertained by the referring courts in light of the fact that the issue is a merit of proof and not an interpretation of European law. By way of conclusion, Services 1 and 2 are linked to e-money, and therefore Method D comes into play, if and when, in case of Service 1, the redemption involves the sending of funds directly to a third-party bank account without passing through the e-money holder and, in case Service 2, there is acceptance of payment for the product or service upon receipt of funds. The case has now been referred back to the Lithuanian Supreme Administrative Court.

In addition to the above analysis, there is another notable principle which should not go unnoticed, especially in light of the blockchain and crypto fever pervading in Malta. This principle purported by this judgement emanates from recital 8 of EMD II which states that:

the definition of electronic money should cover electronic money whether it is held on a payment device in the electronic money holder's possession or stored remotely at a server and managed by the electronic money holder through a specific account for electronic money. That definition should be wide enough to avoid hampering technological innovation and to cover not only all the electronic money products available today in the market but also those products which could be developed in the future.

While the matter is not particularly relevant to the contested issue between the Lithuanian parties, it is pertinent to outline that this technology-neutral recital opens the doors to the classification as electronic money of non-conventional products which are constantly being developed, such as stable coins. To this effect, the European Banking Authority has recently issued a report wherein it confirmed the possibility of crypto-assets which exhibit certain characteristics, to qualify as e-money thereby falling within the scope of the EMDII. In such cases, authorisation as an EMI would be required to carry out activities involving electronic money pursuant to Title II of the EMD2 unless a limited network exemption applies in accordance with Article 9 of that Directive.

This article was first published in The Malta Independent (Law Report), Wednesday, 6th March.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions