The European Commission is seeking to expand the supervisory powers of the European Securities and Markets Authority (ESMA). The draft plan sets out a proposal to make ESMA the direct supervisor of all crypto service providers in the EU.
EU officials have laid out plans to further strengthen ESMA’s powers and strengthen its oversight of cryptocurrencies. Currently, EU crypto companies rely on registration within a single jurisdiction, opting for countries with weaker crypto regulations.
Under the Market in Cryptoassets (MiCA) rules in force, an exchange or other service provider can register in one country and offer services throughout the European Union. Subsequently, national regulators will have a say in the operations of cryptocurrency service providers and the regulation of local markets. reported Bloomberg.
The concentration of regulatory authority in ESMA could disrupt the already complex virtual currency regulations of each country, potentially causing market turmoil once again.
European Commission may delegate powers to national regulators
ESMA’s proposals for enhanced oversight are still preliminary. ESMA may also decide to delegate regulation to national authorities in some cases. The draft proposal awaits approval by the European Parliament and the Council of Member States.
“Reopening MiCA at this stage would create legal uncertainty, risk delaying the authorization process, and divert attention and resources from the practical task of consistent implementation. ” Robert Kopich, director of the Blockchain for Europe Secretariat, an industry lobby group, said:
The introduction of MiCA had a limited impact on cryptocurrency trading in the euro area. Most notably, exchanges and brokerages have increased their usage of USDC while phasing out USDT trading pairs.
Kopich added that national regulators are working more closely with companies and have more detailed involvement compared to ESMA’s cross-border oversight. Other analysts pointed out that further changes in the target post could hurt the EU crypto industry after the introduction of MiCA. Additionally, ESMA needs to rebuild its expertise in tracking crypto service providers.
Proposals to give ESMA more tools primarily come from French and EU institutions, and would create a new layer of compliance for cryptocurrency companies. Other supporters included Austria and Italy, who called for ESMA oversight of large cryptocurrency companies while bringing smaller companies under national jurisdiction.
Calls for centralized regulation emerge amid hacking and money laundering risk
Previous reports linked the ESMA proposal to the 2025 Bybit hack. The hacked funds went through OKX, an exchange that secured a full MiCA. license It is a major player in the EU market.
French people’s greatest concern market regulator is a hub for market operators outside the Eurozone and has significant business worldwide. Although most major cryptocurrency centralized exchanges have re-entered the market with full MiCA licenses, they are still exposed to global risks and work with branches around the world.
ESMA may intervene if these arrangements pose risks to investors and could harm European market participants. However, in most cases, the European branches of major exchanges are isolated, including user accounts and wallets that do not have access to global markets.
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