The shift, championed by ESMA chair Verena Ross, would mark one of the most significant power transfers in the EU’s financial history – away from national watchdogs and toward a single European regulator.

According to Ross, Brussels is preparing a framework that would allow ESMA to directly monitor major parts of the EU’s financial infrastructure. The aim is to eliminate inefficiencies created by fragmented national oversight and to strengthen Europe’s position in global markets. Yet the plan has already drawn resistance from smaller financial hubs like Luxembourg and Malta, where officials fear that losing autonomy could undercut their thriving crypto ecosystems.

The reform push comes amid growing anxiety within ESMA about the rapid rise of tokenized financial assets. The agency has warned that blockchain-based securities, such as tokenized stocks, risk confusing investors by mimicking real equity exposure without granting shareholder rights. Fintechs including Robinhood and Coinbase have already begun rolling out these products across the EU, highlighting how traditional financial boundaries are eroding.

Speaking at a recent industry event, ESMA’s executive director Natasha Cazenave noted that several startups now offer digital investment products tied to real-world equities and derivatives through special-purpose structures. While she declined to name firms, her comments underscored the urgency of establishing clearer, EU-wide oversight mechanisms before the sector grows beyond the reach of regulators.

Ross has been increasingly vocal about the inefficiencies of the current setup. When MiCA – the Markets in Crypto-Assets regulation – was first conceived, ESMA was meant to lead enforcement across the bloc. But concerns about the agency’s capacity shifted that duty to national authorities. In hindsight, Ross argues, that decision only multiplied bureaucracy: “We built the same expertise 27 times over instead of once,” she remarked in a recent speech.

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The case for centralization gained further momentum after ESMA’s July report criticizing Malta’s licensing process for crypto companies, citing weak risk controls in at least one case. Former European Central Bank president Mario Draghi has since called for a U.S.-style model, where a single authority – like the SEC – oversees the entire market to avoid fragmented supervision.

Still, pushback remains fierce. Luxembourg’s chief regulator, Claude Marx, has warned that giving ESMA sweeping control could turn it into a “monster” bureaucracy, while Ireland and Malta have voiced similar concerns about protecting their domestic markets.

Despite the resistance, momentum toward reform is growing as Europe confronts rising funding demands in defense, green technology, and digital infrastructure. EU Commissioner Maria Luís Albuquerque recently confirmed that discussions are underway to give ESMA new powers over large, cross-border financial entities – including crypto exchanges and central clearing platforms. If approved, the reform could redefine how financial oversight operates in Europe, bringing the EU closer than ever to a unified market rulebook.

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