EU to Give ESMA Regulatory Control of Crypto Exchanges

The European Commission is planning to hand greater supervisory authority to the European Securities and Markets Authority (ESMA) in a bid to streamline financial regulation and strengthen the EU’s capital markets union.

The move would grant ESMA direct oversight of major cross-border trading platforms, including clearing houses, crypto exchanges, and stock markets. Currently, these entities fall under the supervision of national regulators through frameworks such as the Markets in Crypto-Assets (MiCA) legislation.

Supporters of the plan argue that a single European regulator could eliminate inefficiencies created by the current patchwork of national regimes. European Central Bank (ECB) current and former presidents Christine Lagarde and Mario Draghi, respectively, have both endorsed the idea, describing centralized supervision as vital for Europe’s ability to compete with the United States.

Verena Ross, ESMA Chair, has also criticized the existing system, saying it forces every EU member state to duplicate regulatory structures at high cost.

A peer review by ESMA of Malta’s financial watchdog, FSA, highlighted those inconsistencies. While acknowledging Malta’s staffing capacity, the review found the regulator only met expectations partially when approving crypto service providers, leaving several compliance issues unresolved.

ESMA noted that a uniform application of MiCA rules is essential to ensure crypto firms are licensed and supervised consistently across the bloc.

France and Germany have shown willingness to support the initiative. French central bank governor François Villeroy de Galhau has argued that tighter, centralized oversight would help close loopholes in the EU’s current system. Germany’s government has also indicated readiness to move in that direction after years of opposition.

Smaller member states, however, remain skeptical. Luxembourg prefers closer cooperation between national regulators over what it described as a costly and inefficient central model. Malta has taken a similar position, warning that further centralization could slow decision-making and hurt competitiveness.

Ireland shares concerns that a powerful EU watchdog might not always act in smaller countries’ interests. Industry groups have also voiced reservations about potential costs.

The Commission plans to present the proposal in December. The proposal would also allow ESMA to resolve disputes between national regulators overseeing big asset managers, though the agency would not directly supervise those firms.

If approved, the reform would mark another step toward a unified European capital market. ESMA is already set to begin consolidating bond and equity price data, as well as environmental, social, and governance (ESG) ratings, by 2026. Bringing crypto oversight under its umbrella would further extend its authority and reinforce efforts to make Europe’s financial markets more efficient and globally competitive.

As the regulatory landscape evolves in major markets like Europe and the U.S., leading crypto companies like American Bitcoin Corp. (NASDAQ: ABTC) will be assessing how the changing landscape could impact their strategic plans.

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