The European Commission’s executive arm is pushing ahead with draft proposals to hand sweeping new powers to the European Securities and Markets Authority (ESMA), making it the direct supervisor for virtually all crypto-asset service providers operating across the European Union.
According to documents circulated ahead of a formal announcement next month, the change would mark a significant shift in regulatory architecture for the digital-asset industry.
Current Framework and Proposed Shift
Under the current framework established by the Markets in Crypto-Assets Regulation (MiCA), service providers are authorised at the member-state level and can “passport” their licences across the bloc.
The new sketch of reform would strip many of the national regulators of their supervisory role and place large cross-border firms, including exchanges and custodians, in ESMA’s remit.
Rationale and Criticisms
Proponents argue the move is necessary to end regulatory fragmentation that has hampered innovation and shielded firms from coherent oversight. ESMA chair Verena Ross has already flagged divergent national approaches as a challenge.
However, the plan is drawing criticism from several member states. Authorities in Malta, Luxembourg, and other smaller jurisdictions warn that centralised oversight risks creating bureaucracy, stifling fintech competitiveness, and undermining local economies.
Industry Implications
Industry players are watching closely: if enacted, the blueprint would require crypto firms to seek authorisation from one EU regulator rather than multiple national regulators, changing compliance burdens and market dynamics.
Firms offering cross-border services could face new licensing rules, and national regulators may lose control over a segment that has grown rapidly under national licensing regimes.
Outlook and Negotiations
The final version of the proposal is expected next month. Negotiations will determine how many “significant” entities fall under ESMA’s direct supervision, how national authorities will cooperate, and whether the move will indeed foster a more integrated, competitive crypto market across Europe.