EU moves to centralize oversight of crypto firms across the bloc

The European Commission wants to give the EU’s markets watchdog new powers to oversee every crypto business operating in the bloc—a shift that could undo years of work by national regulators and the companies they supervise.

According to draft plans shared with officials ahead of an announcement next month, the European Securities and Markets Authority (ESMA) would become the direct supervisor for all cryptoasset service providers and would handle authorizations for new firms.

Right now, under the EU’s 2023 Markets in Cryptoassets (MiCA) framework, crypto companies must secure authorization in at least one member state. That license then lets them “passport” services across the EU. After years of preparation by local regulators and industry, the implementation period is set to end next year.

The Commission’s draft, which is still subject to change, says ESMA could delegate tasks to national authorities where appropriate.

Any final plan would still need approval from the European Parliament and the Council of the EU. The Commission declined to comment.

“Reopening MiCA at this stage would introduce legal uncertainty, risk delaying the authorization process, and divert attention and resources from the practical task of consistent implementation,” said Robert Kopitsch, secretary general of Blockchain for Europe, an industry group.

Kopitsch argued that national regulators’ day-to-day relationships with firms complement ESMA’s cross-border role. “If, in the future, the EU decides to explore more centralized supervisory models, this should be done on the basis of concrete experience and evidence gathered from MiCA’s first years of implementation,” he said.

Andrew Whitworth, founder of consultancy Global Policy Ltd., called the timing tricky. While crypto could be a good test case for giving ESMA more responsibility, “it’s a difficult time given where we’re at with implementation for the goalposts to change,” he said, adding that ESMA would need additional resources to take on work now handled locally.

The proposal is part of a broader push to centralize market supervision in the EU, including plans to give ESMA direct oversight of key clearing houses, depositories, and trading venues. France and EU institutions have been strong backers of the shift, but some member states are wary of ceding powers, and companies fear extra layers of rules.

“In retrospect, you can question whether national supervision was the right decision because it has meant that 27 national supervisors needed to prepare, to build up teams,” ESMA Chair Verena Ross told Bloomberg News in September. “There is still a period where you could say: does it make more sense—for efficiency and for having the cross-border view—to do it in a central point?”

The latest push follows a September call by regulators in France, Austria, and Italy for ESMA to oversee major crypto firms directly, leaving smaller players under national supervision.

In July, ESMA criticized the Maltese regulator’s processes after it issued MiCA licenses to several crypto companies.