EU Power Play: ESMA Poised to Seize Full Crypto Oversight, Threatening MiCA’s Authority

Brussels flexes regulatory muscle—ESMA could become the sole crypto watchdog in a move that sidelines MiCA's hard-fought framework.

Behind closed doors, EU bureaucrats are rewriting the rules. The European Securities and Markets Authority (ESMA) may soon control everything from stablecoin approvals to exchange licensing.

Market players brace for impact: - DeFi protocols face existential questions - Stablecoin issuers confront double jeopardy - National regulators fume over power grab

One banking lobbyist quipped: 'When technocrats fight, the blockchain loses.' The power consolidation comes just as crypto markets show signs of maturity—or as critics say, when traditional finance finally noticed the money flowing elsewhere.

Brussels Plan Would Shift MiCA Approvals From National Watchdogs to ESMA

Under MiCA, crypto companies must secure authorization in one EU member state before offering services across the bloc through “passporting.”

National regulators spent years preparing for this structure, with the full implementation window set to close next year.

Brussels’ new proposal, however, would shift much of that authority to ESMA, including the power to approve new entrants.

The Commission’s draft says ESMA could delegate some tasks back to national authorities, but the overall shift would significantly dilute their role.

Any change would also require approval from both the European Parliament and the Council. Officials declined to comment on the ongoing discussions.

The market restructuring triggered by MiCA enforcement proved significant. 

ESMA published guidance on January 17, 2025 requiring CASPs to delist non-MiCA compliant stablecoins by end of Q1. Major exchanges including Coinbase and https://t.co/grPyxGy9Sm delisted USDT in EU… pic.twitter.com/uvpFkxmzTc

Industry groups warn the MOVE risks destabilizing the regulatory environment just as MiCA is being rolled out.

“Reopening MiCA at this stage would introduce legal uncertainty, risk delaying the authorization process, and divert attention and resources from the practical task of consistent implementation,” Robert Kopitsch, secretary general of Blockchain for Europe, told Bloomberg.

He noted that national watchdogs maintain tighter daily contact with firms, something ESMA cannot easily replicate.

Kopitsch added that any future push toward a centralized model should come only after “concrete experience and evidence gathered from MiCA’s first years of implementation.”

Others echoed concerns about the timing. Andrew Whitworth, founder of Global Policy Ltd., said crypto markets could serve as a useful testbed for a more centralized regime, but shifting responsibility now would be disruptive.

ESMA, he added, would need a major boost in resources to take on the workload currently held by national supervisors.

France Leads EU Push to Expand ESMA Powers Amid Member-State Pushback

Last month, France urged the European Union to give ESMA direct authority over major cryptocurrency firms operating across the bloc.

At the time, Bank of France Governor François Villeroy de Galhau said the move would ensure consistent supervision and enforcement of crypto regulations under the MiCA framework.

He warned that the current system, which allows companies to obtain licenses from individual member states and “passport” them across the EU, risks regulatory loopholes and uneven oversight.

ESMA Chair Verena Ross hinted earlier this year that centralized oversight may ultimately be more efficient.

With 27 national regulators preparing separately for MiCA, she said, “there is still a period where you could say: does it make more sense — for efficiency and for having the cross-border view — to do it in a central point?”

In July, ESMA also raised concerns about Malta’s crypto licensing process, following a peer review of the Malta Financial Services Authority (MFSA).