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Crypto Journalist
Anas Hassan
Crypto Journalist
Anas Hassan
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The European Commission is advancing proposals to transfer direct supervisory authority over crypto exchanges, exchanges and clearing houses to the European Securities and Markets Authority (ESMA), according to the Financial Times.
The move aims to eliminate regulatory fragmentation in the EU’s 27 member states and strengthen the union of the bloc’s capital markets.
In the plan, ESMA will take over the supervision of “the most significant cross-border entities,” including crypto-asset service providers currently regulated under individual national authorities through the Markets in Crypto-Assets (MiCA) framework.
The initiative won the support of ECB President Christine Lagarde and her predecessor, Mario Draghi, who highlighted centralized supervision as essential for European competitiveness against the United States.
Fragmentation undermines market efficiency
The current system has created significant inefficiencies, according to ESMA president Verena Ross.
National regulators in all 27 member states have to build separate cryptographic oversight frameworks, a process he described as duplicative and costly.
“It clearly takes a lot of effort from us and the national supervisors to achieve alignment,” Ross told the Financial Times.
“New specific resources have to be built 27 times, once in each member state, which could be done more efficiently at the European level.“
July ESMA peer review of the Malta Financial Services Authority exposed these inconsistencies.
While recognizing an adequate staff, the review found that Malta only “partially met expectations” in the authorization of crypto asset service providers, with material issues left unresolved during the approval stages.
The Paris-based authority emphasized that the consistent application of MiCA is essential to standardize how crypto companies are licensed and supervised across the bloc.
Support divided between Member States
Germany’s government under Chancellor Friedrich Merz recently signaled an opening to centralized supervision after long opposition.
France remains a strong supporterwith the governor of the Bank of France, François Villeroy de Galhau, warn that the current passport system risks regulatory loopholes and irregular surveillance.
“This framework benefits from a much stricter regulation of the multiple issuance of the same stablecoin in the European Union and outside the European Union, to reduce arbitrage risks in times of stress,” he said in October.
Meanwhile, smaller financial centers are resisting the change.
Luxembourg Finance Minister Gilles Roth said his country prefers “convergence of supervision rather than creating an expensive and ineffective centralized model.”
Malta has explicitly rejected ESMA’s expanded powers, with its Financial Services Authority warning that centralization would introduce bureaucratic layers that would hinder competitiveness during a period when the EU is striving to strengthen its global position.
Ireland and Luxembourg also fear the move could disadvantage their national financial sectors, remaining skeptical that EU regulators will act in the best interests of smaller nations.
Trade groups and industry lobbies have raised concerns about higher compliance costs.
“Expanding Esma’s oversight responsibilities would mean higher fees paid by industry” said Marin Capelle, policy adviser at Efama, the fund industry lobby.
Broader integration of capital markets
The commission is expected to present its “markets integration package” in December.
Beyond crypto exchanges, ESMA will also gain binding dispute resolution powers between national supervisors overseeing large asset managers, even if it does not supervise them directly.
The initiative is part of a wider effort to complete the union of EU capital markets.
The current landscape, with dozens of national and regional regulators and hundreds of commercial institutions, increases costs for cross-border trade, a significant obstacle for the scale of startups in Europe instead of the United States
Ross emphasized the need for capital markets to support the EU’s long-term goals. “This would be a key impetus to have a capital market in Europe that is more integrated and globally competitive“, he said.
ESMA will begin overseeing share and bond price consolidation, alongside ESG ratings, from 2026. Cryptocurrency oversight will extend the regulator’s authority as Europe pushes for tighter market integration.
