Nikolas Sargeant
The European Union is preparing to consolidate cryptocurrency oversight under the European Securities and Markets Authority (ESMA), moving supervision away from individual national regulators in a bid to address fragmentation across the bloc. ESMA Chair Verena Ross confirmed that the European Commission is developing plans to centralize supervision of crypto exchanges and service providers, which officials believe would strengthen the implementation of the Markets in Crypto-Assets (MiCA) framework that took effect in June 2024.
Under the current system, crypto-asset service provider licenses are issued by national authorities rather than a central EU body. Smaller member states like Lithuania, Malta, and Luxembourg have led the licensing process, authorizing major platforms including ByBit, Gemini, Kraken, and Bitvavo. However, Ross argues this decentralized approach has created inefficiencies, forcing each country to independently build expertise and oversight systems while producing inconsistent licensing standards.
The centralization push comes amid growing tensions over MiCA's "passporting" provision, which allows companies licensed in one EU country to operate throughout the bloc without additional approvals. Industry experts warn that having 27 different national authorities supervising the same regulation risks undermining MiCA's goal of harmonization. France has reportedly considered restricting crypto companies licensed elsewhere in the EU from operating within its borders, raising concerns about potential single-market violations.
ESMA, established in 2011 following the global financial crisis, was created to harmonize financial regulation across Europe. The proposed reform aims to build a more integrated and globally competitive EU financial landscape by addressing market fragmentation and moving closer to a unified capital market across the continent's 27 member states.
