The European Union is moving toward consolidating its oversight of cryptocurrency and stock markets to foster a more competitive and integrated financial environment. As part of this effort, the European Commission is considering a proposal to expand the oversight authority of the European Securities and Markets Authority (ESMA), aiming to streamline regulation across member states and address longstanding fragmentation issues. This initiative signals a significant step toward creating a unified regulatory framework for crypto markets, attempting to balance innovation with increased oversight.
- The European Commission plans to extend ESMA’s jurisdiction to include stock and crypto exchanges and related service providers.
- Proposed reforms aim to replace the current fragmented regulatory landscape with a centralized supervision model similar to the US SEC.
- EU leaders, including ECB President Christine Lagarde, endorse a single supervisory body to manage systemic risks from large cross-border firms.
- The draft regulation, expected in December, will give ESMA authority to resolve disputes and make binding decisions without direct supervision.
- France raises concerns about crypto license “passporting” under the MiCA regulation, advocating for stronger oversight by ESMA.
Proposed Expansion of ESMA’s Role in Regulating Markets
The European Commission is exploring a comprehensive plan to bring stock and cryptocurrency exchanges under a unified supervisory umbrella, aiming to boost the EU’s competitiveness in global capital markets. The proposal involves expanding ESMA’s jurisdiction to oversee a broader range of financial trading infrastructure, including crypto asset service providers, in a bid to reduce the current regulatory complexity arising from multiple national agencies.
This move mirrors the regulatory approach adopted by the U.S., where the Securities and Exchange Commission (SEC) provides centralized oversight. European officials, including European Central Bank President Christine Lagarde, support establishing a European equivalent—a single authority with broad powers, including direct supervision of systemic firms to prevent financial crises.
According to sources familiar with the matter, the draft regulation is expected to be published in December. The proposed rules include giving ESMA binding authority to settle disputes among asset managers, potentially eliminating enforcement gaps that have hampered cross-border crypto activities in the EU.
France’s Push for Stronger Oversight and MiCA Concerns
France is raising alarms over the potential for regulatory loopholes under the EU’s upcoming Markets in Crypto-Assets Regulation (MiCA). The French securities regulator has threatened to block the licensing “passporting” process that allows crypto firms authorized in one member state to operate across the entire EU, citing enforcement concerns.
In September, France also joined Austria and Italy in calling for ESMA to take a central role in supervising major crypto companies. Since MiCA took effect in December 2024, crypto service providers licensed in one country can seek to operate freely throughout the bloc, but questions remain over enforcement consistency.
ESMA Chair Verena Ross reaffirmed the agency’s plans to transfer oversight responsibilities from national regulators to a centralized authority, aiming to address persistent fragmentation across European crypto markets and move toward a more cohesive digital finance ecosystem.
As the EU continues to shape its approach to regulating the fast-growing crypto and blockchain sectors, these developments highlight a clear desire for stronger oversight, risk mitigation, and market integration in the crypto markets of Europe.
