Summary — The European Commission has proposed moving supervision of major crypto firms from individual member-state regulators to the EU-level supervisor, the European Securities and Markets Authority (ESMA), aiming to reduce fragmentation in the Markets in Crypto-Assets (MiCA) regime and improve cross-border oversight. The plan would give ESMA direct supervisory powers over the most significant cross-border crypto-asset service providers, but it still needs approval from the European Parliament and the Council.
What the proposal would change
Under the Commission’s market-integration package, ESMA would gain the power to directly supervise key pieces of market infrastructure — including crypto-asset service providers (CASPs), trading venues and certain clearing or settlement entities — instead of leaving day-to-day authorisation and oversight solely to national regulators. The move is pitched as a fix to the inconsistent application of MiCA and other EU financial rules across member states.
The Commission says centralising supervision will create a more level playing field, reduce regulatory arbitrage between member states, and speed up cross-border market operations inside the single market. However, the package must be negotiated and approved by the European Parliament and the Council before it becomes law.
Why the change is being pushed
Since MiCA came into force, several EU countries have taken differing approaches to licensing and supervising crypto businesses — a fragmentation that some large member states say undermines investor protection and market integrity. Officials and ESMA leadership argue that supervising the most significant cross-border firms centrally would avoid 27 parallel rulebooks and inconsistent enforcement.
Proponents also frame the reform as a competitiveness measure: the Commission is seeking to reduce barriers that keep EU capital markets less integrated than rivals such as the U.S., and better coordination under ESMA is cast as a step toward that goal.
Who supports — and who resists
Supporters: France, Italy and Austria have been among the louder voices calling for ESMA to take on more powers in order to stop a perceived “race to the bottom” among permissive national regulators. ESMA’s chair has publicly signalled support for a stronger EU-level role to ensure consistent supervision.
Opponents: Smaller financial hubs such as Malta, Luxembourg and Ireland have expressed concerns that centralisation would reduce their competitiveness and add bureaucracy. Malta’s regulator has warned expanded ESMA powers could discourage firms from operating in its jurisdiction. The political negotiations in the Council and Parliament are expected to be contentious.
Industry reaction and implications
- For crypto firms: A single EU supervisor would simplify cross-border supervision for large, pan-European players — but could impose stricter, harmonised compliance requirements and limit the ability of firms to “shop” for lighter national regimes.
- For investors: Centralised oversight could mean more consistent enforcement of investor-protection rules across the bloc, clearer enforcement standards, and potentially improved market integrity.
- For EU capital markets: The change is intended to make the EU’s markets more integrated and competitive by reducing fragmentation that currently hampers scalability and cross-border liquidity.
Some legal experts warn the proposals will need careful drafting to balance efficiency gains with democratic accountability and to avoid concentrating too much power without adequate checks and oversight.
Next steps and timeline
The Commission’s proposals must be approved by the European Parliament and the Council. Expect intense negotiations over scope (which entities would be classed “significant”), transitional arrangements, passporting rules and the exact supervisory toolkit ESMA would use. The timeline depends on political compromise; members states sceptical of centralisation could slow or reshape the plan.
Bottom line
The European Commission’s move to centralise supervision of major crypto-asset firms under ESMA marks a significant potential shift in EU financial regulation — one aimed at ending the fragmented application of MiCA and creating a uniform, cross-border supervisory framework. If adopted, it would reshape where and how large crypto businesses are overseen in Europe, but the measure faces political hurdles and pushback from some member states.
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