The European Commission plans to transfer oversight of crypto platforms from individual national regulators to a single EU-wide authority called the European Securities and Markets Authority (ESMA).

The proposal will be published in December 2025 as part of a larger “Market Integration Package.” If approved by member states, the changes could take effect by late 2026, creating what supporters call a “European SEC” modeled after America’s powerful Securities and Exchange Commission.

Why Europe Wants Centralized Crypto Oversight

The current system has created significant problems. Each of the EU’s 27 countries built its own crypto supervision team from scratch after the Markets in Crypto-Assets (MiCA) regulation became fully effective in December 2024. ESMA chair Verena Ross explained that “specific new resources had to be built up 27 times, once in each member state, which could have been done more efficiently at a European level.”

This fragmentation has led to inconsistent enforcement. Under MiCA’s “passporting” system, crypto companies can get licensed in one EU country and then operate across all 27 member states. However, some countries worry that firms are shopping for the easiest regulators to get quick approvals, then using those licenses throughout Europe.

Malta became a case study for these concerns. In July 2025, ESMA criticized Malta’s Financial Services Authority for approving crypto companies while important risk issues remained unresolved, including governance problems and cybersecurity concerns. The review found Malta only “partially met expectations” in authorizing crypto asset service providers, with material issues left unaddressed during approval stages.

Marina Markezic from the European Crypto Initiative summarized the problem: having 27 different national authorities supervising the same regulation creates confusion and risks undermining MiCA’s main goal of creating consistent rules across Europe.

Powerful Support Behind the Plan

European Central Bank President Christine Lagarde has been one of the strongest voices pushing for centralization. At the European Banking Congress on November 17, 2023, Lagarde called for creating a “European SEC” capable of directly supervising large financial actors. “It would need a broad mandate, including direct supervision, to mitigate systemic risks posed by large cross-border firms,” she stated.

Source: @ESMAComms

France, Italy, and Austria are actively pushing for ESMA to take direct control of supervising major crypto firms. Bank of France Governor François Villeroy de Galhau argues that letting individual countries handle oversight creates uneven enforcement and regulatory loopholes, especially concerning stablecoins issued both within and outside the EU.

Even Germany, which long opposed centralization, has recently signaled openness to the plan under Chancellor Friedrich Merz’s government.

Strong Opposition From Financial Centers

Not everyone supports giving ESMA more power. Smaller financial centers that have built thriving crypto industries are fighting back hard.

Luxembourg Finance Minister Gilles Roth said his country prefers “supervisory convergence rather than creating a costly and ineffective centralized model.” Malta has explicitly rejected expanded ESMA powers, with its Financial Services Authority warning that centralization would introduce additional bureaucracy that could hinder competitiveness. Ireland and Luxembourg similarly fear the move could disadvantage their national financial sectors.

Claude Marx, who leads Luxembourg’s financial regulator, went further, warning that centralizing all power at ESMA could create a regulatory “monster.”

Malta has become a hub for crypto licensing, granting permits to major exchanges like OKX and Crypto.com. As of July 2025, Malta had issued at least five crypto asset service provider licenses under MiCA, making it one of the first movers in Europe. Luxembourg, like Malta, has built a thriving financial services sector and fears losing its competitive edge.

What This Means for Crypto Companies

Under the proposed system, ESMA would directly oversee “the most significant cross-border entities,” including major crypto exchanges, while local authorities would continue supervising smaller, domestic firms. ESMA would gain authority to step in on cross-border disputes and issue binding decisions.

For crypto companies, the changes present both opportunities and risks. A single, centralized supervisor could mean more consistent rules and easier compliance when operating across multiple countries. Companies would no longer need to juggle different requirements from each jurisdiction.

However, industry groups warn about downsides. One European exchange group criticized the plan, saying it offers little benefit in transferring oversight to ESMA. The group warned that introducing a new supervisory layer could increase compliance costs and undermine years of cooperation with national regulators who understand local markets better.

Marin Capelle, a policy adviser at Efama (the European fund industry lobby), warned that expanding ESMA’s role would come with higher compliance costs and “mean higher fees paid by the industry.”

France provides a glimpse of what stricter enforcement might look like. French regulators are conducting extensive anti-money laundering checks on Binance and dozens of other cryptocurrency exchanges. Over 100 registered crypto service providers in France face evaluation before a June 2026 deadline. Out of more than 100 registered platforms, only four companies have received full authorization so far, representing an approval rate of roughly 4%.

The Road Ahead

The European Commission will publish its full proposal in December 2025. After that, member states and financial unions will scrutinize the plan before any approval process begins. Given the strong opposition from Luxembourg, Ireland, and Malta, along with concerns from industry groups, the proposal faces significant political hurdles.

Industry experts note that both companies and regulators may not be fully prepared for rapid changes. Delphine Forma, Head of UK and EU Policy at Solidus Labs, warned that “the cryptocurrency industry is not ready for MiCA. Regulators are not ready… Some countries haven’t even implemented an enforcement law.”

Europe’s Regulatory Crossroads

The EU’s plan to centralize crypto oversight under ESMA represents one of the most significant regulatory shifts in European financial history. While supporters believe it will create a more competitive and secure market, opponents worry about increased costs and bureaucracy. The December proposal will reveal whether Brussels can balance these competing interests and create a system that protects investors without crushing innovation. For now, crypto companies operating in Europe face an uncertain future as they await the details of what could become their new regulatory reality.

---

Filed under: Bitcoin - @ November 3, 2025 11:23 pm