- MiCA currently allows companies to obtain cross-border access through a single national license.
- National regulators and firms worry about loss of control and added bureaucracy.
- France, Austria and Italy have backed expanding ESMA’s role for major firms.
The European Commission is preparing a proposal to grant the European Securities and Markets Authority (ESMA) broader supervisory powers in the cryptocurrency sector.
If approved, ESMA would become the primary authority responsible for supervising all crypto-asset service providers across the European Union, according to reports.
The proposal would mark a significant change to how the bloc regulates digital assets by centralizing oversight in one institution instead of relying solely on 27 national regulators.
The draft plan, expected to be published next month, arrives just months before the Markets in Crypto-Assets (MiCA) regulation is due to be fully implemented.
MiCA, adopted in 2023, is intended to be the EU’s flagship regulatory framework for crypto-assets.
Under the current MiCA rules, firms need a license from just one member state to operate across the entire bloc.
That structure reflects years of negotiation between national authorities and industry stakeholders aiming to streamline cross-border operations.
MiCA faces uncertainty
MiCA was designed to provide legal clarity and consistency across the EU so companies could obtain authorization in one country and use that approval to offer services in others — a mechanism known as passporting.
The goal was to reduce fragmentation and simplify operations for businesses seeking to operate in multiple member states.
The Commission’s new plan would replace that process by giving ESMA direct responsibility for approving and supervising all providers, regardless of their home jurisdiction.
The draft text suggests ESMA could, when necessary, delegate tasks back to national authorities. Even so, ESMA would remain the central point of contact and the ultimate overseer.
That shift has raised concerns among those involved in MiCA’s implementation.
With the implementation window closing in 2024, firms and local regulators fear that changing the framework at this stage could cause delays and confusion.
Critics warn that re-opening the debate on MiCA risks undermining legal certainty at a time when stability is needed for market participants to prepare for compliance.
Others point out that transferring responsibility to ESMA without ensuring sufficient resources could weaken enforcement capacity rather than strengthen it.
Any amendment to hand ESMA these powers would still need approval by both the European Parliament and the Council of the EU before becoming law.
Regulators push back
The Commission’s move has not gone unnoticed by industry and national authorities. Many argue that local regulators are better placed to handle day-to-day interactions with firms operating on their territory.
Blockchain for Europe, an industry lobbying group, warned that centralizing control at this stage could distract from the urgent task of ensuring MiCA operates smoothly.
Consultants and national officials have also said ESMA would require additional staff and funding to take on a pan-EU licensing and supervision role.
Member states have already invested significantly in teams and specialist knowledge to meet MiCA’s requirements, and replacing those local processes with a centralized system could create licensing bottlenecks and slow supervisory action.
ESMA Chair Verena Ross said earlier this year that the current model, in which 27 separate authorities prepare to perform the same tasks, may not be the most efficient arrangement.
France backs a centralized model
France has been among the strongest advocates for expanding ESMA’s remit, pushing alongside some EU institutions for a more centralized oversight model.
In September, regulators from France, Austria and Italy called on ESMA to assume direct supervision of major crypto firms, while allowing smaller entities to remain under national supervision.
That proposal would create a two-tier system, offering a compromise between full centralization and complete national control.
The plan aligns with a broader EU trend toward consolidating financial supervision at the European level.
Brussels has also floated giving ESMA authority over central counterparties, trading systems and custodians linked to crypto markets.
But several member states oppose this shift, arguing that surrendering national oversight risks creating extra bureaucracy and reducing regulatory flexibility essential for addressing local market specifics.
Pressure for reform intensified in July, when ESMA raised concerns about licensing practices in Malta. The Maltese regulator had issued MiCA permissions to several firms, prompting questions about consistency and due diligence across the EU.
That episode strengthened arguments in favor of a more harmonized supervisory approach.
As the Commission finalizes its proposal, the crypto sector remains on edge. Businesses await clarity on whether licensing and enforcement will stay largely national or move toward a unified EU-level authority.
The outcome will shape how firms prepare for compliance, the speed of licensing decisions, and the overall coherence of regulation across the single market.