TLDR: EU’s new plan gives ESMA more power over crypto and financial markets. ESMA to oversee EU crypto firms, enhancing market regulation efficiency. New EU proposal centralizes crypto oversight, streamlining regulations. France, Italy support ESMA’s expanded role in regulating crypto markets. EU aims for unified crypto regulations, putting ESMA in charge. The European Commission has [...] The post ESMA Set to Take Over Crypto Supervision in Push for Stronger EU Regulation appeared first on CoinCentral.TLDR: EU’s new plan gives ESMA more power over crypto and financial markets. ESMA to oversee EU crypto firms, enhancing market regulation efficiency. New EU proposal centralizes crypto oversight, streamlining regulations. France, Italy support ESMA’s expanded role in regulating crypto markets. EU aims for unified crypto regulations, putting ESMA in charge. The European Commission has [...] The post ESMA Set to Take Over Crypto Supervision in Push for Stronger EU Regulation appeared first on CoinCentral.

ESMA Set to Take Over Crypto Supervision in Push for Stronger EU Regulation

TLDR:

  • EU’s new plan gives ESMA more power over crypto and financial markets.
  • ESMA to oversee EU crypto firms, enhancing market regulation efficiency.
  • New EU proposal centralizes crypto oversight, streamlining regulations.
  • France, Italy support ESMA’s expanded role in regulating crypto markets.
  • EU aims for unified crypto regulations, putting ESMA in charge.

The European Commission has proposed new measures that would transfer oversight of key financial market infrastructure to the European Securities and Markets Authority (ESMA). This includes expanding ESMA’s supervisory powers over crypto-asset service providers (CASPs), trading venues, and central counterparties. The move aims to make the European Union’s capital markets more competitive and align them closer to U.S. standards.

The proposal would centralize supervision of crypto markets under ESMA, which would also gain more authority in the broader asset management sector. It represents a strategic effort to streamline regulation across the EU, reducing fragmentation among national regulators. With this shift, ESMA’s role would resemble that of the U.S. Securities and Exchange Commission, ensuring a more consistent approach to crypto and financial oversight across the EU.

If the European Parliament and Council approve the proposal, ESMA will gain direct supervision over crypto firms and other major infrastructure. This change follows concerns about inconsistent regulatory practices among EU member states. France, Italy, and Austria have expressed support for giving ESMA more power, particularly after issues with Malta’s crypto licensing regime.

Background: A Shift Towards Centralized Supervision

The EU’s current regulatory framework is fragmented, with multiple national and regional agencies overseeing financial markets. This division has hindered cross-border trade and innovation, especially for startups in the crypto and fintech sectors. By centralizing oversight, ESMA would streamline regulatory processes and improve efficiency, facilitating smoother operations across EU borders.

The European Central Bank (ECB) has also supported the idea of a centralized regulatory body for financial markets. ECB President Christine Lagarde proposed creating a “European SEC” in 2023, arguing that ESMA should take on a broader mandate. She emphasized that a centralized authority could better manage systemic risks posed by large, cross-border firms, particularly in the rapidly evolving crypto market.

France has been vocal about the need for stronger supervision of crypto companies. The French government, along with other EU nations, has called for ESMA to assume oversight of major crypto firms to close gaps in regulatory enforcement. This follows concerns that crypto firms were moving to jurisdictions with more lenient licensing rules, undermining the effectiveness of EU-wide regulations like the Markets in Crypto-Assets Regulation (MiCA).

Challenges and Potential Impact on Innovation

Despite widespread support for ESMA’s expanded role, some concerns remain about the potential impact on innovation. Industry experts have warned that centralizing authorization and supervision could slow decision-making, particularly for smaller firms. Faustine Fleuret, head of public affairs at decentralized lending protocol Morpho, noted that such a shift could demand significant human and financial resources from ESMA, potentially hindering the development of new players in the market.

The transition to a more centralized regulatory framework could also face resistance from member states. While some countries like France and Italy support the changes, others remain cautious about the broader implications for their domestic markets. ESMA has expressed its readiness to take on the expanded role, calling the proposal a major step toward deeper and more efficient EU capital markets.

The post ESMA Set to Take Over Crypto Supervision in Push for Stronger EU Regulation appeared first on CoinCentral.

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