The invention of the steam engine did not reduce coal consumption, but allowed coal to enter more scenes; the invention of the ATM did not replace bank tellers, but allowed bank branches to expand to more communities. This is the phenomenon of Jevons' paradox - after technology reduces unit costs, demand will be released from people who were originally squeezed out by price.

Stable currency payment follows the same path: one is to supplement the cross-border payment market, and the other is to allow the 1.4 billion people around the world who lack banking services to access the financial network for the first time.

Faced with such a global market like Day1Global, the question that arises is: What kind of license do I need to launch a stablecoin payment project?

Therefore, this article uses my license application and practical experience over the years (basically done or participated in all stablecoin payment + on-chain finance projects) to sort out the compliance licensing strategies for stablecoin payment projects.

1. Compliance is not equal to being licensed

Everyone has seen in the news that a company has received MiCA CASP, and has seen the MAS MPI application announcement - these will naturally become a frame of reference. But for most early-stage projects, Other people's endgame is not necessarily your starting point.

"How should I hold a license in compliance with regulations?" is actually not a question that can be answered directly. Before answering, we need to unpack three premises that are often skipped:

• To clarify your own business form, you need a license of this level - but stablecoin payment is not a single track. Acquisition, collection, encryption cards, OTC, and stablecoin issuance each have completely different regulatory frameworks;

• It is estimated that the business scale can bear the compliance costs at this level - MiCA CASP started with a total investment of one million US dollars, and MAS MPI is of the same magnitude, which is beyond the support of most early-stage projects;

• The compliance budget is in place, the team is in place, and the funding channels are aligned - without these three points, no matter how expensive the license is, it will not be able to run.

Behind these three premises are actually the same distinction:Compliance posture and compliance license are two different things.

The former - KYC processes, AML monitoring, Travel Rule data fields, auditability - must be built into the product architecture from day one, with no room for haggling. The latter - which license to obtain and when to upgrade - is a judgment based on the scale of the business.

Of course, exceptions exist. If you have sufficient financial support behind you, or you have to serve institutional counterparties with high compliance requirements from the first day, and do heavy regulatory business such as stable currency issuance, it is reasonable to directly configure a Tier 1 license such as MiCA CASP. But for most early-stage projects that still need to survive, compliance decision-making is an optimization problem with constraints.

Posture cannot be saved, but the license can wait.

2. Five dimensions of compliance licensing decision-making

How to wait for the License? Compliance decisions are never single-variable optimizations.

First, business form. Payment is not a track, but a whole combination. Acquiring, payment collection, encryption cards, cross-border settlement, OTC, and stable currency issuance, each has a completely different regulatory framework. A company with the same annual revenue of US$10 million may need EMI/PI/MSO + MSB/SRO for B2B cross-border settlement, and Visa/Mastercard subject qualifications for B2C encryption cards - the two systems have almost no overlap.

And stablecoin payments have almost no pure stablecoin business - fiat currency on/off-ramp is always a supporting package. All licensed combinations discussed in this article include legal currency licenses (EMI, PI, MTL) by default.

Second, business volume. Look at TPV (Total Payment Volume, annual transaction volume) and take rate %. The take rate for B2B cross-border settlement is usually 0.1-0.5%, consumer encryption card 1-2%, OTC matching 0.1-0.5% - the revenue generated by the same TPV under different business forms can vary ten times.

Third, compliance costs. It’s not just the filing fee and attorney’s fees. The substantive review costs of local offices, compliance staff, and directors, plus the ongoing costs of annual audits, regulatory reporting, and compliance technology stacks, can add up to several times the filing fee.

Fourth, capital channel. Obtaining a license does not mean that you can open an account. The funding path corresponding to each license is different. Before choosing a license, you must first confirm that this path is open. This is the link where the business is most likely to get stuck.

Fifth, time. MSB 3-4 months, SRO 6-9 months, MiCA CASP 12-18 months. Time is not an independent dimension, but a constraint that runs through the first four dimensions - the business form determines which card you have to wait for, the volume and cost determine how long you can sustain the compliance burn, and the channel determines how long it takes to really start to gain momentum after getting the card. And some time windows are hard: MiCA’s transition period expires on July 1, 2026, after which CASPs without MiCA authorization cannot operate in the EU.

"License can wait" does not mean that you can wait indefinitely. Only after superimposing the timeline can you find your position on this map.

3. A quick overview of the mainstream stablecoin payment licenses

The higher the level, the wider the scope of your counterparty’s willingness to cooperate with you, but the annual compliance cost also jumps by an order of magnitude.

The most common licenses for stablecoin payment projects, ranked by "compliance level" and "counterparty signal strength":

The "Tier" here is not a legal classification, but an industry consensus - the common tiering logic used by counterparty compliance teams during due diligence. Tier 1 is a full-featured license directly supervised by important financial regulatory agencies; Tier 2 is a transitional license with formal supervision or self-regulatory framework but lower threshold; Tier 3 is a registration system and mainly meets the AML/CFT baseline.

Among the license plates reviewed in this article, there are two that need to be highlighted separately.

• Canadian MSB has the widest business coverage among Tier 3 - it handles both legal currency and stable currency with one card, and is the default starting point for early projects.

• Swiss SRO has the highest ROI among Tier 2 - the business coverage is the same as MSB, but the counterparty signal level is one level higher, and there is a clear upgrade path to PII (after the new regulations take effect in 2027).

These two forms form the standard upgrade path from phase one to phase two for most early stage projects.

（https://www.finma.ch/en/authorisation/self-regulatory-organisations-sros/）

4. Three stages of compliance licensing: minimization → credit enhancement → institutional level

Superimposing the five dimensions of "Business Form × TPV × Compliance Cost × Capital Channel × Time" onto the timeline, we can see that the compliance licensing path for early projects is not a one-time decision, but a progression of three stages.

The first stage: minimize compliance and let the business run first

Let the business run legally, the goal is so straightforward. What you need is "the most economical compliance entity + available funding channel cooperation".

The two most common paths:

• A single license with wide business coverage + capital channel cooperation. MSB Canada is standard at this stage – FINTRAC registration, with an upfront cost of tens of thousands of dollars, is explicitly covered by Dealing in Virtual Currency from 2020 onwards. After obtaining the MSB, you can use the crypto-friendly PSP as a capital channel to support basic operations.

• Two lightweight licenses for geographical + business division. The combination of Canadian MSB and Hong Kong MSO can basically meet the needs of most businesses - MSB manages the stable currency business, and MSO manages the cross-border legal currency in Asia. The two cards complement each other.

The most important thing at this stage is to get your business running quickly, which is suitable for early project verification PMF, or players whose business model itself does not require a high-level license.

The price is profit sharing (channel parties get 0.3-1%) and the business is subject to the partner's strategy. The regulatory level is also tightening - "outsourcing doesn't absolve you of regulatory responsibility" is the industry consensus. As a substantive business party, you still bear compliance responsibilities.

Tier 1 license is not an asset to you at this stage, it is a burden.

In the stage where the annual income is less than USD 1 million, don't move the regional license if you can.

（Rain Raises $250M to Expand Stablecoin Payments Infrastructure）

Rain proves the logic of the first stage to the extreme. This company that provides stable currency payment card infrastructure was established in 2021. By the beginning of 2026, it will have 200+ corporate customers, an annual transaction volume of US$3 billion, covering 150+ countries, and its customers include Western Union. But its compliance structure at this stage is primarily US multi-state MTL + Visa Principal Membership – not reliant on MiCA or MAS MPI. It was not until the completion of USD 250 million Series C in January 2026, with a valuation of US$1.95 billion, that Rain explicitly included "expansion of licensed markets" in the financing announcement.

A company with an annual transaction volume of 3 billion and a valuation of US$2 billion regards "replenishing regional licenses" as a matter of course after Series C.

The second stage: credit enhancement and endorsement after the business is increased

You are not "letting your business run legally", but "making larger counterparties willing to cooperate with you".

When TPV reaches the range of USD 500 million to USD 2 billion and annual revenue reaches USD 5 million to USD 15 million, the bottleneck is usually not whether there are enough licenses, but whether the signal strength of the counterparty DD is sufficient.

When European banks, stablecoin issuers, and TradFi institutions contact you, their compliance teams will ask you to produce regulatory endorsements that are "more serious than MSB." Tier 3 license plates will be questioned in this kind of DD - it's not that it's non-compliant, it's that the signal strength of the "registration system" is not strong enough.

The standard action is to stack a Tier 2 license plate.

The most natural upgrade path is to upgrade from Canadian MSB to Swiss SRO (VQF) - the business coverage is the same, but the counterparty signal level is one level higher, the upfront cost is hundreds of thousands of dollars, and the annual operating cost is of the same magnitude. SRO is a highly recognized self-regulatory license in the current European encryption supervision, and its business scope covers stablecoins and legal currencies.

If it can be used as a legal currency with an EMI or PI, it can cover the DD requirements of European institutional counterparties and open European legal currency business.

Singapore’s DTCPay takes this standard path. This stablecoin payment company was previously licensed in Singapore, Hong Kong, Australia, the United States, and Canada - Asia has too many licenses covered. In July 2025, we received the Green Light Letter from CSSF in Luxembourg, and in October we were officially approved for the EMI License, opening the passport to the European market (EEA 30 countries, population 450 million). European market access is already in place when the USD 10 million Series A is completed in March 2026.

Obtain the credit enhancement license first, and then use compliance milestones to leverage the next round of financing - this is another way of "using the Tier 2 license as leverage after the business scales up".

OKX obtained the PI License issued by the Malta MFSA in February 2026. The logic is similar but more passive. OKX obtained the Malta MiCA License as early as January 2025, which allows it to trade and hold stablecoins in compliance with regulations. But this time, PI needs to be supplemented because it involves OKX Pay and OKX Card, which involves the European legal currency on/off ramp. Under the MiCA + PSD2 dual framework, stablecoin payments involving stablecoins (defined as Electronic Money Tokens, EMT by EU law) must hold an additional PI or EMI license. OKX cannot escape at this scale.

This road is the only way for all players who want to make European stablecoin payments.

Compliance at this stage is not about "pursuing the highest standards", but about "matching counterparty expectations and market access requirements."

Phase 3: Institutional Level License

The third stage is not about who is rich.

When you have an annual income of more than 15 million USD and want to build yourself into a "financial infrastructure", compliance decisions enter the third stage - EU MiCA CASP, Abu Dhabi ADGM FSP, Singapore MAS MPI, Swiss PII / Crypto-Institution. The total initial investment is one million U.S. dollars, and the annual operation is several million U.S. dollars.

But this level of license is not a "more expensive version of SRO", it has a completely different regulatory logic. MiCA and MAS MPI require capital adequacy, bankruptcy insularity, fiduciary responsibility, independent directors, internal audit, DORA compliance - based on your operational experience, compliance team maturity, IT system robustness, and the background of key personnel.

Even if you have money, if the team does not have licensed operation experience, the IT system has not passed regulatory-level stress testing, and the compliance system has not been settled - the regulatory authorities will not issue you a license, and you will not be able to survive if it is issued.

Circle is the frame of reference. As of the beginning of 2026, it holds licenses of different levels in 9 jurisdictions, from US state-level MTL to French EMI, British FCA EMI, Singapore MAS MPI, Abu Dhabi ADGM FSP, Bermuda BMA Class F - this was not applied for at one time, but was piled up over 10 years starting from the state-level MTL in 2014.

(Cirlce)

Why can't you skip the first two stages?

Regulations will not issue you a license. What supervision recognizes is a gradual path.

In the review of applications for Tier 1 licenses such as MiCA, MAS MPI, and ADGM FSP, "fit and proper" is the core link. Supervision depends on your compliance operation record, the maturity of your risk control system, the robustness of your IT system, and the experience of key personnel.

A company starting from scratch directly applies for MiCA CASP or MAS MPI, and the pass rate is extremely low - the regulatory preference is for a "progressive compliance upgrade" trajectory, not a "one-time jump".

The regulatory logic behind this is actually very simple and completely consistent with traditional finance. Traditional bank licenses are also issued in this way. No one can skip the payment license and trust license and get a bank license directly.

The cost of skipping a grade is not just application rejection. Even if the regulator issues you a high-end license out of strategic considerations, you cannot afford the corresponding substantive compliance requirements. The size of the compliance team, investment in IT systems, and maturity of the risk control system required by MiCA are levels that cannot be achieved within 18 months if an early project is built from scratch.

You can buy a license, but not ability.

However, another path is to directly acquire companies that are already licensed and have operational experience - Paxos's acquisition of Finland's EMI Membrane Finance in 2024 is based on this logic. Upon completion of the acquisition, it will obtain EU's EMI + MiCA compliance qualification. Acquisition buys both licenses and capabilities, but only if there are sufficient funds and integration capabilities, which itself is not an option for early-stage projects.

5. The cost of mismatch

The three stages look clear, but the price of the mismatch stage is very hard.

The first is excessive compliance. After raising the seed round, I feel that I should "align my head" and jump directly to the third stage to apply for MiCA CASP or MAS MPI. After 18 months, US$1 million had been burned in compliance costs, the business had not yet been verified, and the Series A round could not tell a story. This is spending the SoV path’s compliance budget on MoE operations – the most common mismatch for early stage projects.

The second is to bet on the wrong market. In 2024-2025, many projects are betting on Polish VASP or Australian DCE single licenses, waiting to enter the EU or Australian local market through passport. As a result, changes in the regulatory path disrupted all expectations. The risk of relying on a single license will only grow in the era of regulatory fragmentation - compliance practices in 2026 have moved from "single jurisdiction optimization" to "combined compliance architecture."

Third, the banking channel is stuck. This is the least discussed part of the compliance discussion.

The license only "allows you to do what", and the bank channel determines "whether you can actually run the business."

It is normal for local banks in Canada to refuse to open accounts for encrypted MSBs. Many early projects cannot open accounts after obtaining licenses, and the entire structure is invalid.

But this is highly individualized - of two companies that also hold Canadian MSBs, one can open EMI channels such as BVNK and ClearJunction, but the other may not. The difference is in the UBO structure, business model, KYC documentation and even luck.

The most common risk control trigger points in UBO structure:

• Mainland Chinese passport holders as ultimate beneficiaries - most European EMIs have explicit or implicit rejection policies

• BVI → Cayman → Multi-layer offshore structure of operating entities - triggering enhanced due diligence or even direct rejection

• UBO has a background related to crypto exchanges - common reasons for rejection

High-risk keywords in the business model description:

• "OTC" appears in the onboarding file - almost automatically triggering manual review

• "peer-to-peer payments", "unhosted wallet", "self-custodied wallet" - also triggered

• "aggregator", "crypto mixing" - directly close most EMI channels

• The combination of "gaming" + "crypto" - equivalent to a high-risk label in the current environment

Geographic dimension: Any description involving nodes in Iran, Russia, and North Korea in the transaction path is a direct veto.

The danger with these triggers is that they don't appear in the rejection letter. EMI's standard response is "not a good fit at this time", and you never know which word might get stuck on you.

You cannot choose bank channels by "looking at the pictures". Due diligence must be done in advance - and whether you can open an account is fundamentally determined by the nature of your business and regulatory classification.

6. MoE or SoV: the switch that determines all costs

Why these three stages? Why do compliance costs vary by an order of magnitude at each stage?

There is an underlying switch behind this: the role of stablecoins in stablecoin payments is extending from "Medium of Exchange" to "Store of Value".

This switch determines the order of magnitude of your compliance costs.

• MoE stage - Stable currency is just a channel for funds. Users exchange fiat currency for USDT to spend it immediately, and the stay time is measured in hours and days. Supervision focuses on "pass-through" requirements such as AML and Travel Rule. Licenses such as Canada's MSB and Hong Kong's MSO are designed around the MoE, with low thresholds.

• SoV stage - users begin to hold stablecoins as assets, and the retention time changes from "days" to "months" and "years". At this time, you are no longer the channel, you are the asset holder. Regulatory concerns become reserve management, bankruptcy isolation, fiduciary duties, and interest compliance—each corresponding to a higher-level license.

SoV transformation will become the consensus direction of global supervision in 2025-2026. The U.S. GENIUS Act (signed in July 2025) defines stablecoins as "payment stablecoins", and the issuance rights are restricted to specially licensed issuers or banks regulated by the OCC - Bridge, a subsidiary of Stripe, has received OCC Initial Trust Bank Approval, and Circle, Ripple, Paxos, and Fidelity are all lining up. Hong Kong HKMA Stablecoin Regulations (effective in August 2025) + The first batch of issuance licenses will be issued in March 2026, requiring the same level of capital adequacy and reserve management as banks.

Regulations have included stablecoin issuance at the "financial infrastructure" level - the regulatory path leads directly to a bank license or a quasi-bank license.

The implication for early projects is very clear: when designing a business model, you must think clearly whether you are a MoE or a SoV, whether you want both, or whether you want to implement it through DeFi.

The compliance costs of the two paths differ by an order of magnitude. The MoE's budget for SoV's business can never be fully replenished.

Of course, MoE and SoV are not an either/or switch. Many projects start with MoE, but as users start to keep balances in their wallets and the holding time lengthens from days to months, the business will naturally slide towards SoV. This evolution itself is not a problem - the question is whether your compliance structure has been upgraded along with the business shape. The three-stage progressive logic is essentially responding to this evolution.

Only when you know which road you are on can you know how to wait for the license.

7. Return to the first question

"Which license should I get?" - This is the question at the beginning of this article.

After going through the five dimensions, three stages, three mismatches and the underlying logic of MoE/SoV, this question naturally evolved into a set of more specific judgments: Which stage is my business now? What does the counterparty want? Will the bank open an account for me? Am I on my way to MoE or SoV?

Match your own size and upgrade in stages. Licenses are a following indicator of business, not a leading indicator.

Get the business running first.