EU Plans to Grant ESMA Greater Powers Over Crypto and Stock Market Supervision
The European Commission is preparing comprehensive changes that could hand over direct supervisory authority of stock exchanges, cryptocurrency companies, and clearing houses to the EU markets watchdog, the European Securities and Markets Authority (ESMA). This move aims to solve the persistent fragmentation in the EU financial sector and create a more uniform capital market.
According to Verena Ross, Chairman of ESMA, the proposed changes would offer an important impetus for a capital market in Europe that is integrated and globally more competitive. The regulation of several financial market sectors, currently monitored by national authorities, would move to ESMA, including crypto providers of asset service providers such as stock exchanges and depot banks.
ESMA’s Arguments for Centralized Supervision
ESMA argues that the fragmented supervision creates inefficiencies and weakens consumer protection. Ross stated that the decentralization led to inefficiencies and inconsistent use of the EU’s crypto-asset regulatory framework, known as MiCA. “It is clearly a lot of effort from us and national supervisors to achieve orientation,” she noted. Specific new resources had to be built in each member state, 27 times, which could have been more efficient at the European level.
In July, ESMA criticized Malta’s license process for pan-EU crypto companies and warned that certain risk areas were not adequately assessed. The agency argues that the fragmented supervision undermines consumer protection and investor trust. ESMA’s concerns highlight the need for a more centralized and unified approach to supervising the EU’s financial markets.
Resistance from Smaller EU Countries
The initiative has already drawn resistance from smaller EU countries, such as Luxembourg, Ireland, and Malta. Claude Marx, head of the Luxembourg financial regulatory authority, warned that the centralization of powers at ESMA could create a regulatory “monster.” These countries are concerned that the transfer of supervisory authority to ESMA could damage their local financial sectors.
Despite the resistance, the European Commission is progressing with the plans. Maria Luís Albuquerque, EU Commissioner for Financial Services, recently confirmed that the block is evaluating a formal proposal for the transfer of cross-border companies, including stock exchanges and crypto platforms.
ESMA’s Role in the EU’s Financial Sector
ESMA is already set up to assess consolidated equity and bond price bands and ESG ratings from 2026. Ross emphasized the need for capital markets to support the long-term goals of the EU, including defense, green energy, and digital infrastructure. “The demand for the removal of obstacles has risen to a level, not only at the EU level but also within the member states,” she said.
As the EU continues to navigate the complexities of regulating its financial markets, the proposal to grant ESMA greater powers is a significant development. The outcome of this proposal will have far-reaching implications for the EU’s financial sector and its ability to compete globally.
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