A crypto-asset service provider authorised in one European member state has had a portion of its offering restricted by the supervisor of another, on the grounds that the marketed product falls outside the scope of its home authorisation.

Passporting is the mechanism that makes a single European licence commercially worthwhile. A precedent in which host-state supervisors can second-guess the scope of a home-state authorisation would materially change the calculus for firms choosing where to seek registration.

Lawyers following the matter say the dispute turns on classification rather than conduct. The service in question bundles custody with a yield-bearing feature, and the two supervisors disagree about whether the combination constitutes a separate regulated activity.

The European Securities and Markets Authority has the power to mediate. Whether it chooses to do so early, or lets national practice diverge first, is the question compliance officers across the bloc are now asking.