Stronger Supervisory Framework Aims to Close Competitiveness Gap With the US
The European Commission has unveiled a sweeping proposaal to expand the supervisory powers of the European Securities and Markets Authority (ESMA) targeting crypto-asset service providers, trading venues and key market infrastructure. The initiative is designed to streamline the European Union’s fragmented regulatory landscape and bring its financial markets closer to the centralized oversight model seen in the United States.
EU Strengthens ESMA’s Mandate Over Crypto Firms
Under the proposal, ESMA woulld gain direct supervisory competences over high-impact market participants, including major crypto platforms opeerating under the Markets in Crypto-Assets Regulation (MiCA). The packagea seeks to reduce regulatory inconsistencies between member states and tighten enforcement, especially after concerns arose over uneven licensing standards in jurisdictions such as Malta.
France, Austria and Italy have already voiced support for shifting oversight of large crypto firms to ESMA. French officials have even signaled the possibility of restricting license passporting if national regimes continue to diverge, underscoring the need for stronger EU-wide supervision.
The reforms follow earlier discussions, including a 2023 call by European Central Bank President Christine Lagarde for a European SECcapable of overseeing systemic cross-border firms. The Commission argues that greater centralization could help reverse Europe’s persistent market fragmentation. In 2024, EU stock market capitalization equaled 73% of GDP, far below the 270% recorded in the US—highlighting the bloc’s competitive disadvantage.
Fintech and crypto industry groups warn that fully centralizing supervision within ESMA could introduce slower decision-making, especially for startups that rely on more responsive national regulators. They caution that expanded oversight will require substantial staffing and resources to avoid bottlenecks.
The proposal now moves to negotiations in the European Parliament and the Council. If adopted, it would mark one of the most significant shifts in EU financial supervision in more than a decade.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.