Eu Plan To Centralize Crypto Oversight Under Esma Dividing The...

Extending ESMA jurisdiction to include financial markets threatens to slow innovation for crypto and fintech companies, but some policy experts see a silver lining.

The European Commission’s plan to expand the authority of the European Securities and Markets Authority (ESMA) over cryptocurrency and capital markets has sparked debate across Europe, with critics warning it could stifle innovation and slow decision-making.

The European Union is reportedly exploring giving the ESMA direct supervisory powers over stock exchanges and crypto service providers, potentially creating a centralized regulatory framework similar to the US Securities and Exchange Commission (SEC). The European Commission is expected to publish a draft of the plan in December.

Under the existing Markets in Crypto-Assets Regulation (MiCA), which took effect for crypto asset service providers in December 2024, companies authorized in one EU member state can “passport” their licenses to operate across the 27-nation bloc.

However, granting control to the ESMA risks slowing down innovation, particularly among crypto and financial technology (fintech) companies, according to Faustine Fleuret, head of public affairs at decentralized lending protocol Morpho.

“Centralizing authorization and supervision entirely within ESMA would demand vast human and financial resources, she told Cointelegraph.

Fleuret said a more balanced approach would involve giving ESMA stronger oversight powers over national regulators, such as the ability to suspend or revoke licenses, rather than centralizing all decision-making in Brussels.

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In September, France’s securities regulator threatened to ban the “passporting” of crypto licenses under the MiCA regime, raising concerns about enforcement gaps in the EU-wide regulatory framework.

“The EU passport is the cornerstone of EU financial regulations, including MiCA; jeopardising it means depriving crypto market players of the only competitive advantage that Europe currently offers them,” said Fleuret.

Source: CoinTelegraph