EU Proposes Granting ESMA Centralized Authority Over Crypto
According to reports, the European Commission has proposed new rules that would grant the European Securities and Markets Authority (ESMA) larger supervision over cryptocurrency companies, instead of leaving it to local supervisory authorities.
The proposal has triggered backlash from smaller EU countries, such as Malta and Luxembourg, which fear that this would threaten their regulatory autonomy and competitiveness. The EU legislators have reported reforms aimed at giving ESMA direct supervision of crypto companies, changing the authority from national supervisory authorities.
Background and Context
Verena Ross, chairman of the ESMA, stated that the European Commission has designed the regulatory reform to make regulatory surveillance on the capital market in Europe more uniform. The EU had previously proposed making ESMA the main manager of crypto companies when the Markets in Crypto-Assets (MICA) regulation was first created, but it was not fully implemented.
The plan to make ESMA the sole supervisory authority of crypto in the EU has received counter-reactions in smaller countries with prospective crypto agents, such as Luxembourg and Malta. Malta, in particular, has actively granted crypto-asset service provider (CASP) licenses. From July 2025, Malta granted at least five CASP licenses as part of the MICA regulation framework, including licenses for large crypto exchanges such as Crypto.com and OKX.
Controversy Surrounding ESMA
ESMA, founded in 2011, was formed to improve the harmonization of market rules in the EU. However, most of the region’s financial market activities are still under the supervision of the 27 national authorities. Ross said that the EU watchdog has “tried for some time with the Capital Markets Union and other initiatives to set up a more effective capital market”. Despite the efforts, such measures do not yet have to be implemented to put all EU markets under one roof, since each area has very different market structures.
Not everyone agrees that ESMA should have full control over the different EU markets, especially with regard to the emerging crypto markets. Some smaller EU nations, including Luxembourg, Malta, and Ireland, have promoted ESMA against the awarding of more authority, arguing that it could threaten their well-established financial sectors.
Claude Marx, head of the financial guard of Luxembourg, the Commission for Surveillance of Sectors or CSSF, stated that “it is an imagination that the European Commission wants to drive a single superior. The European Commission has always explained that it does not have Idée fixes for a European Sec,” referring to the US financial guards.
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