European Commission Proposal to Expand ESMA’s Supervisory Mandate over Crypto and Financial Markets
The European Commission's recent proposal to expand the European Securities and Markets Authority (ESMA)'s powers to include direct supervision over cryptocurrency exchanges, stock exchanges, and clearing houses has sparked considerable debate in the realm of crypto regulation. This initiative aims to centralize oversight currently fragmented across the 27 EU member states, where national authorities individually regulate crypto asset service providers under the Markets in Crypto-Assets (MiCA) framework.
The proposal envisions ESMA gaining control over the supervision of major cross-border institutions and dispute resolution powers among national regulators, helping to end duplicated efforts and inconsistent enforcement exemplified by the partial compliance issues found in some national bodies like Malta's regulator. This centralized oversight is expected to improve market integrity by leveling the playing field and curtailing practices such as "forum shopping" for lenient regulatory environments, although it may increase oversight scrutiny and licensing timelines for crypto firms.
Strategically, the proposal aligns with the EU’s broader agenda to complete the Capital Markets Union, making Europe a more attractive home for startups and investors, and preventing promising companies from relocating to the U.S. The Commission plans to unveil the legislative package in December 2025, marking a significant step toward a more integrated and competitive European financial market, with ESMA playing a role somewhat analogous to the U.S. Securities and Exchange Commission (SEC) in overseeing crypto and stock markets.
