Malta Defies EU Power Grab: Crypto Sovereignty Battle Escalates Against ESMA Takeover

Malta draws line in sand against Brussels bureaucrats—refuses to surrender crypto oversight to European Securities and Markets Authority.

The Mediterranean Standoff

While EU regulators push for centralized control, Malta's pro-crypto stance puts it on collision course with traditional financial oversight. The island nation—dubbed 'Blockchain Island'—insists local regulators understand crypto innovation better than distant EU offices.

Power Play or Progress Barrier?

ESMA's power grab threatens to stifle Europe's crypto competitiveness just as markets heat up. Malta's resistance highlights growing tension between innovation-friendly jurisdictions and old-guard financial regulators—because nothing says 'progress' like another layer of EU bureaucracy.

Watch this regulatory showdown—where sovereignty meets Satoshi—determine whether Europe embraces crypto's future or gets left holding yesterday's financial bag.

Malta Supports Regulatory Coordination, Rejects Centralized EU Crypto Oversight

Malta’s Financial Services Authority (MFSA), however, said it supports greater coordination between national regulators but not centralized control.

“We believe that centralisation at this stage would only introduce an additional LAYER of bureaucracy, which could hinder efficiency during a period when the EU is actively striving to enhance its competitiveness,” a spokesperson told Reuters.

While France has been a vocal advocate for ESMA’s increased role, even warning it may challenge crypto licenses issued by other countries, Malta appears cautious about handing over control.

The MFSA itself has faced scrutiny in recent months over its licensing process under MiCA.

Financial regulators across Europe remain divided on the issue.

ESMA chair Verena Ross has indicated she would welcome expanded oversight powers, but any shift in supervisory authority would require consensus among member states, something that’s proving difficult to achieve.

As reported, France has raised alarms over the uneven application of crypto licensing rules across the EU, warning it may block firms licensed in other member states from operating domestically.

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– 0% tax on foreign income (non-dom residents)
– EU citizenship in just 1 year (cost: €1 MILLION+)
– 10th smallest country in the world

It has one of THE strongest passports you can buy.

7 reasons why "The Jewel of the Mediterranean" should be on your radar:pic.twitter.com/39EqgBDjQh

The head of France’s AMF, Marie-Anne Barbat-Layani, called for transferring oversight to the ESMA to ensure consistent supervision.

The concern centers on the MiCA regulation’s “passporting” model, which allows crypto firms approved in one EU country to operate in all 27.

French regulators fear this system may create regulatory loopholes, enabling firms to exploit weaker oversight in certain jurisdictions as they expand across Europe.

ESMA Flags Gaps in Malta’s Crypto Licensing

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

While acknowledging that the MFSA has adequate staffing and sector expertise, the review found that Malta only “partially met expectations” in its authorization of a crypto asset service provider (CASP), with several material issues left unaddressed during the approval stage.

The review, initiated in April 2025 by ESMA’s Peer Review Committee, focused on the MFSA’s supervisory setup, authorization procedures, and oversight tools.

ESMA emphasized that consistency across EU member states is essential under the MiCA regulatory framework, which seeks to standardize how crypto firms are licensed and supervised throughout the bloc.

Although the peer review targeted Malta specifically, ESMA stressed that the findings are meant to guide all National Competent Authorities (NCAs) as they refine their CASP approval processes.

The regulator urged the MFSA to reassess unresolved concerns from past authorizations and strengthen its review process in line with EU-wide expectations.