EU Looking at Expanded Crypto Oversight to Tackle Fragmented Supervision

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The European Securities and Markets Authority (ESMA) is preparing to take on more power across EU financial sectors, including crypto, in a move toward a centralized regulatory model. 

The development follows concerns that current national frameworks under the Markets in Crypto-Assets (MiCA) regulation have led to regulatory fragmentation across EU member states. ESMA could thus have authority over cryptocurrency exchanges and other crypto businesses across the EU.

Verena Ross, chair of ESMA, confirmed in an interview with the Financial Times that the European Commission is formulating proposals to extend ESMA’s authority to direct supervision in various financial sectors, moving away from national regulators. Ross said that consolidating oversight would promote a more “integrated and globally competitive” EU financial architecture.

Under the existing MiCA regime, licensing for digital asset service providers follows a unified framework, but is handled by national regulators, with firms earning passporting rights to operate across the EU upon approval by one national regulator. 

Smaller states such as Malta have been particularly active in granting licenses, while larger countries like France may be considering restrictions on operators licensed elsewhere in the EU. 

This diversity of approaches risks creating legal uncertainty and regulatory conflict between national and EU regulators.