TLDR:

  • Malta approved a crypto firm under MiCA despite unresolved risk issues.

  • ESMA urges stricter oversight for CASPs across all EU member states.

  • Concerns raised over governance, IT, and cross-border operations.

  • Review may delay crypto licenses as EU regulators tighten standards.

The European Securities and Markets Authority (ESMA) has initiated a formal review into Malta’s authorization process of a crypto firm under MiCA. 

This move has sparked discussions across the European Union over how the new crypto law is being applied. While MiCA was designed to create consistency, national regulators are implementing it differently. Malta’s fast-track approval has raised concerns over compliance, investor protection, and equal treatment. 

The review may shift the tone of crypto licensing across the EU, tightening the path for other firms.

Malta’s MiCA Licensing Process Comes Under Scrutiny

According to ESMA, Malta’s financial watchdog approved a crypto firm despite several unresolved issues. 

Some risk areas were reportedly overlooked during the authorization phase. These included governance, conflict of interest checks, business models, and technological readiness.

Although the Malta Financial Services Authority (MFSA) was found to have sufficient resources and expertise, ESMA highlighted lapses in due diligence. The review found that the regulator’s early supervision needed stronger risk assessment in key areas related to crypto infrastructure and services.

ESMA has called on all national competent authorities (NCAs) across the EU to take note of the findings. The agency advised regulators to reinforce their evaluation of risk factors such as IT architecture, decentralized products, and cross-border operations. 

Promotion of unregulated services was also flagged as an area of concern.

This guidance aims to ensure all CASP (Crypto Asset Service Provider) licenses across the EU go through robust and uniform scrutiny. The review stresses that while it centers on Malta, the recommendations apply to every jurisdiction under MiCA. 

ESMA sees this step as crucial for building consistent supervisory practices in a rapidly evolving sector.

Impact on Crypto Licensing Across the EU

The outcome of this review may cause delays in licensing decisions throughout the EU. 

Authorities may now proceed more cautiously, particularly for firms with aggressive expansion models or complex structures. The crypto industry could face stricter oversight during the onboarding process.

Additionally, the review positions ESMA as a central authority ensuring that no country undermines MiCA’s core objective, unified regulation. This move reinforces the need for cross-border cooperation among regulators as the EU adapts to the new framework.

ESMA’s findings serve as a signal to the market that lenient authorizations will not go unchecked. The agency plans to continue peer reviews to help strengthen supervisory capacity and foster better harmonization. 

All NCAs are expected to integrate the recommendations into their licensing processes.

 

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