European Central Bank Archives

The European Central Bank has backed a European Commission plan to hand stronger oversight powers over major crypto firms to ESMA, giving fresh support to a wider push for more centralized supervision across the bloc. The push also raises a wider political question. For critics, shifting more authority from national regulators to ESMA is not only a crypto policy issue. It is also another step away from national sovereignty and toward more centralized control over financial activity. In that view, the plan risks narrowing both personal financial freedom and the room individual EU states have to set their own approach. Good to Know The ECB said ESMA oversight of major cross-border crypto firms would reduce fragmentation. Under MiCA, crypto firms can now win a licence in one EU country and operate across the bloc. The proposal still needs negotiation among EU governments and the European Parliament. ECB Gives Fresh Weight to ESMA Crypto Plan The biggest shift in the proposal is simple: less room for national regulators to control large crypto firms, and more power for ESMA. In a nonbinding opinion published Friday, the ECB said bringing systemically important cross-border market firms, including major crypto groups, under the Paris-based regulator would help cut fragmentation and strengthen financial stability. That would be a major change to how MiCA works in practice. Right now, crypto-asset service providers can set up under one national regulator and then passport services across the EU. That structure has helped firms choose friendlier licensing bases, with companies such as Kraken in Ireland, Coinbase and Bitstamp in Luxembourg, and Bitpanda in Austria, while Bitpanda asset management picked Germany. The ECB argued that direct ESMA supervision for all CASPs would improve supervisory convergence, reduce cross-border risk, and help protect the integrity of the single market. It also said links between banks and crypto firms are growing, whether through customer crypto services or direct servicing of crypto groups, raising the risk that shocks could spread into the wider financial system. Resistance is already there. Some smaller member states, including Malta, have pushed back and argued the plan comes too early because MiCA rules for CASPs only started applying in full in late 2024. Reuters has also reported wider concerns from countries such as Ireland and Luxembourg over giving ESMA broader direct powers. Even with ECB backing, the plan is still months from law. EU governments and lawmakers now need to negotiate the broader package before Parliament can take it further. The ECB also said ESMA would need enough staff and funding if it is going to police major crypto firms directly. FAQ

European Central Bank

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