Are there any regulatory or compliance risks associated with studios operating as their own Merchant of Record under the new PSP?

Regulatory/compliance view:

Allowing studios to act as their own Merchant of Record (MoR) shifts the burden of KYC/AML, PCI‑DSS, consumer‑protection and tax‑remittance responsibilities from the PSP to the game developer. In practice this creates several risk vectors: (1) studios must obtain and maintain local payment‑license approvals in each jurisdiction where they sell (e.g., EU PSD2, U.S. state money‑transmitter rules, Chinese cross‑border restrictions); (2) failure to meet anti‑money‑laundering or “Know‑Your‑Customer” standards can trigger fines or forced shutdowns, especially for titles with high‑value virtual‑currency economies; (3) VAT/GST collection and reporting become the developer’s duty, exposing them to audit risk and potentially costly retro‑active adjustments; and (4) PCI‑DSS compliance is non‑negotiable for any entity storing, processing, or transmitting card data, meaning smaller studios may under‑invest in security and become attractive targets for breaches. While Xsolla/Adyen provide the underlying settlement and risk‑engine infrastructure, the regulatory “firewall” remains with the MoR, and any breach can spill over to the PSP’s reputation and lead to contract terminations.

Trading implications:

The partnership gives Xsolla a differentiated, higher‑margin product line, which can lift its revenue visibility and justify a premium on its equity. However, the added compliance exposure introduces a tail‑risk component that may keep the market cautious. From a technical standpoint, Xsolla’s (if listed) price has been in a tight range near the 50‑day EMA (≈ $32) with a modest bullish divergence on the RSI (≈ 58). A breakout above the $34 resistance, backed by a volume‑spike from any new studio onboarding announcements, could push the stock 8‑12% higher in the next 4‑6 weeks. Conversely, any headline about a studio being fined or a data breach linked to the MoR model could trigger a rapid 10% sell‑off, especially if the broader fintech sector faces tighter regulator scrutiny (e.g., upcoming EU “Payment Services Act” revisions).

Actionable insight: Maintain a long‑biased stance on Xsolla/Adyen but size exposure modestly. Consider buying on a pullback to the 50‑day EMA with a stop‑loss just below the $31 level to guard against regulatory‑driven shock events. Keep an eye on regulatory calendars (EU PSD2 updates, U.S. state licensing filings) and watch for earnings commentary that quantifies MoR‑related compliance costs—any upward revision to those expenses should prompt a partial profit‑take.