ESMA Seeks Direct Crypto Oversight Under MiCA Framework

The European Union’s markets regulator is preparing to expand its authority to cover cryptocurrency exchanges and other operators in a move that would fundamentally reshape financial oversight across the bloc. Verena Ross, chair of the European Securities and Markets Authority (ESMA), confirmed in an interview with the Financial Times that the European Commission is developing plans to shift supervision of several financial sectors, including crypto, from national regulators to ESMA. This represents a significant departure from the current system where individual member states maintain primary regulatory authority over cryptocurrency operations within their borders.

The proposed reform directly addresses what officials describe as ‘continued fragmentation in markets’ across the 27-nation bloc. Under the current structure, cryptocurrency exchanges and operators face varying licensing requirements and supervisory standards depending on which EU country they operate in. This patchwork approach has created compliance challenges for cross-border crypto businesses and resulted in inconsistent consumer protection standards across the union. The move toward centralized oversight aims to create uniform regulatory expectations and streamline the licensing process for cryptocurrency firms operating in multiple EU jurisdictions.

This regulatory consolidation comes as the EU implements its landmark Markets in Crypto-Assets (MiCA) framework, which establishes comprehensive rules for cryptocurrency markets across the bloc. The timing of ESMA’s expanded authority proposal is strategically aligned with MiCA’s rollout, ensuring that supervisory capabilities match the scope of the new regulatory framework. Officials say the centralized approach would better align oversight with MiCA’s provisions, creating a cohesive system where rulemaking and enforcement operate under coordinated leadership.

Verena Ross emphasized that the reform would help build ‘a more integrated and globally competitive’ EU financial landscape. By establishing ESMA as the primary crypto supervisor, the EU aims to present a unified regulatory front that can compete with other major financial jurisdictions. The centralized model is expected to reduce regulatory arbitrage opportunities where crypto firms might seek out jurisdictions with more lenient oversight, thereby strengthening the integrity of the entire EU crypto market. This approach also positions the EU to exert greater influence in global cryptocurrency standard-setting discussions.

The fragmentation in cross-border licensing has emerged as a particular concern for both regulators and industry participants. Currently, cryptocurrency exchanges seeking to operate across multiple EU countries must navigate different national regulatory requirements, creating significant compliance costs and operational complexities. The proposed shift to ESMA supervision would establish a single licensing authority for cross-border crypto operations, potentially streamlining market access while maintaining rigorous oversight standards.

This move toward centralized control reflects broader trends in EU financial regulation, where the commission has increasingly sought to harmonize standards across member states. The proposal aims to move closer to a unified capital market across Europe, addressing inconsistencies that have hampered the development of a truly integrated digital asset ecosystem. By reducing regulatory fragmentation, the EU hopes to foster innovation while ensuring consistent consumer protection and market stability across all member states.

The European Commission’s development of these plans signals a recognition that effective implementation of MiCA requires corresponding adjustments to the supervisory architecture. As cryptocurrency markets continue to evolve and cross-border activity increases, the current nationally-focused oversight model appears increasingly inadequate for addressing the transnational nature of digital asset trading. The proposed consolidation of authority at ESMA represents a pragmatic response to the borderless characteristics of cryptocurrency markets while maintaining the EU’s commitment to robust financial regulation.