EU to grant ESMA centralized control over cryptocurrencies

The European Commission is reportedly drafting new rules for ESMA to increase its oversight of crypto companies, rather than leaving it up to local regulators.

According to a report in the Financial Times, EU lawmakers want to transfer the power to supervise cryptocurrencies from national authorities to the European Securities and Markets Authority. The move follows a proposal to give the EU’s market regulator direct supervision of stock exchanges, crypto companies and clearinghouses.

ESMA President Verena Ross said the European Commission is currently drafting regulatory reforms to make regulatory oversight more uniform across Europe’s capital markets. The EU previously proposed making ESMA the main supervisor of crypto companies when MiCA was first developed, but this has not been fully implemented.

Plans to make ESMA the EU’s sole cryptocurrency regulator have faced opposition from smaller countries such as Luxembourg and Malta, which are developing new approaches to cryptocurrencies. Malta, in particular, has been active in licensing crypto asset service providers.

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As of July 2025, Malta has granted at least five CASP licenses under the MiCA regulatory framework, including licenses for major cryptocurrency exchanges such as Crypto.com and OKX. These five licenses are among the first to be granted in Europe under the new MiCA framework, making Malta an important early adopter of the EU’s comprehensive crypto asset framework.

In fact, ESMA criticized Malta’s license approval process for cryptocurrency companies. In July, EU financial authorities alleged that “some risk areas were not properly assessed during the authorization process” for an unnamed company that received a license from the Maltese authorities.

“It also meant that people had to build up specific new resources and expertise 27 times under different national supervisory authorities, something that could have been done more efficiently at European level,” Ross told the Financial Times.

Why ESMA’s initiative is controversial

ESMA was established in 2011 with the hope of improving the harmonization of market rules across the EU. However, most financial market activity in the region remains under the supervision of 27 national authorities.

Ross said the EU watchdog “has been working for quite some time with the Capital Markets Union and other initiatives to build more effective capital markets.” Despite efforts, measures to bring all markets of the European Union under one umbrella have not yet been implemented, as the market structures in each region differ significantly.

Not everyone agrees that ESMA should have full control over various EU markets, especially emerging crypto markets. Some smaller EU countries, such as Luxembourg, Malta and Ireland, oppose giving ESMA further powers, saying it could threaten their well-established financial sectors.

Needless to say, for the growing crypto industry, placing ESMA in the driver’s seat for regulating crypto asset service providers could create a rigid, one-size-fits-all system that stifles innovation and concentrates too much power in a single authority.

Claude Marx, head of Luxembourg’s financial watchdog, the Commission for Financial Supervisory Services (CSSF), has warned that bringing all EU investment funds under ESMA’s supervision risks creating a “monster” in what he considers an “extremely complex” institution.

“It is a fantasy that the European Commission wants to push for a single supervisory authority. The European Commission has always said that it has no vision for setting up a European SEC,” Marx said, referring to the US financial watchdog.

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