- MiCA currently lets companies gain cross-border access via a single national licence.
- National regulators and firms fear a loss of control and added bureaucracy.
- France, Austria and Italy have backed ESMA’s expanded role for large firms.
The European Commission is preparing to give the European Securities and Markets Authority sweeping powers over the crypto sector.
If approved, ESMA would become the sole body responsible for supervising all crypto asset service providers in the European Union, reported Bloomberg.
The proposal marks a significant change to how the bloc regulates digital assets, placing oversight in the hands of a central authority rather than relying on 27 national regulators.
This draft plan, expected to be announced next month, comes just months before the full implementation of the Markets in Cryptoassets Regulation.
MiCA, passed in 2023, is set to become the EU’s flagship framework for crypto regulation.
Under MiCA, companies currently only need a licence in one member state to operate across the bloc.
This structure has been the result of years of work by both regulators and firms.
MiCA faces uncertainty
MiCA was designed to provide legal clarity and consistency across the EU.
It allows firms to gain authorisation in a single country and use that to offer services in other EU states. This system is known as passporting.
The goal was to reduce fragmentation and streamline operations for businesses.
But the Commission’s new plan would override this process by giving ESMA direct responsibility for approving and monitoring all providers, regardless of where they are based.
The draft proposal suggests ESMA could delegate tasks back to national authorities when needed.
However, the central point of contact would still be ESMA. This change has raised concerns from those involved in the rollout of MiCA.
With the implementation window closing in 2024, firms and local regulators worry that shifting the framework now could cause delays and confusion.
Critics argue that restarting the discussion around MiCA could undermine legal certainty.
Others say that moving responsibilities to ESMA without enough resources could weaken enforcement.
The proposal still needs support from both the European Parliament and the Council of the EU before it becomes law.
Pushback from regulators
The Commission’s move has not gone unnoticed by crypto industry bodies. Many believe that local regulators are better equipped for day-to-day engagement with firms.
Blockchain for Europe, an industry group, has warned that centralising control at this stage would divert attention from the task of getting MiCA running smoothly.
Some consultants have also pointed out that ESMA would require more staff and funding to take on such a role.
National authorities have already invested heavily in building teams and expertise to meet MiCA’s demands.
Replacing that with a central process could result in delays in licensing and supervision.
ESMA chair Verena Ross said earlier this year that the current structure, with 27 separate supervisors preparing for the same task, may not be the most efficient model.
France backs centralised model
France, along with EU institutions, has pushed hardest for expanding ESMA’s powers.
In September, regulators from France, Austria and Italy called for ESMA to supervise major crypto firms directly, while smaller companies could remain under national watch.
This idea would create a two-tier system and offer a compromise between full centralisation and local control.
The proposal is part of a wider trend in the EU to centralise financial oversight.
Brussels has also suggested giving ESMA control over clearing houses, trading venues, and depositories.
However, some countries have resisted, arguing that giving up national control could create unnecessary bureaucracy and reduce flexibility.
The urgency of reform increased in July when ESMA raised concerns about Malta’s crypto licensing practices.
The Maltese regulator had issued MiCA approvals to several firms, prompting questions about consistency and due diligence across the EU.
This incident added weight to the argument for a more unified supervisory model.
As the Commission finalises its proposal, the crypto sector remains on edge.
Businesses are waiting to see whether their licensing and regulatory future will remain at the national level or shift entirely to an EU-wide body.