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.
