Malta financial regulator opposes giving ESMA direct supervisory powers over crypto firms

The Malta financial regulator has opposed the push from other European member states to give the European Securities and Markets Authority (ESMA) oversight over crypto firms. The latest opposition from Malta adds to the division among EU regulators over how to apply the bloc’s new Markets in Crypto-Assets (MiCA) framework.

France, Italy, and Austria urged ESMA to oversee major crypto firms directly. The countries highlighted concerns that the national regulators may interpret the MiCA rules inconsistently, potentially creating regulatory loopholes.  France’s financial regulating firm has also suggested that it may challenge the crypto licences other EU states offer if it believes the standards applied are uneven. 

ESMA chair Verena Ross acknowledges rift over EU crypto oversight 

The Malta Financial Services Authority (MFSA) insisted it supports regulatory coordination but not centralization. The authority acknowledged that centralization at the current stage would introduce an added layer of bureaucracy. According to MFSA, an added layer of bureaucracy may hinder efficiency when the EU actively seeks to enhance competitiveness.

The MFSA reiterated its support for ESMA’s role in fostering supervisory convergence across the EU member states but rejected the option of direct control. There is an ongoing tension within the EU about the ‘passporting’ model tied to the MiCA license, allowing crypto firms licensed in one state to operate across all 27. The French regulator urged uniform supervision, warning that firms may exploit weaker oversight in some areas across the bloc.

Verena Ross, ESMA chair, said she would allow supervisory powers, but any small change would require a consensus among the member states, which is elusive. She acknowledged France’s long-standing vocal advocate of centralizing oversight. 

ESMA reviewed Malta’s crypto licensing procedures earlier this year and shared a review report in July. The report highlighted that the MFSA partially met the expectations in the authorization of crypto asset service providers. The report revealed that several material issues were left unaddressed during the approval stage. Despite the findings, the review acknowledged Malta’s staffing and expertise, urging the MFSA to strengthen its procedures and reassess unresolved issues from past authorizations. 

ESMA flags Malta’s MiCA licensing gaps as EU pushes for consistency 

The oversight committee for the EU argued that its findings on MFSA were intended to guide all National Competent Authorities as they adapt to MiCA’s requirements. The committee insisted that consistency across the bloc is important to avoid regulatory gaps. 

Meanwhile, other EU regulators remain split from the bloc, leaving no clear consensus as MiCA’s full rollout continues. According to a published report by the Centre for European Policy Studies (CEPS), the MiCA faces its first real credibility test over the treatment of multi-issuance stablecoins. The publication noted that institutional disagreements have created uncertainty on whether stablecoins jointly issued by EU and non-EU entities are permissible. 

The European Central Bank (ECB) raised concerns over the sovereignty and prudential risks, while the European Community took a narrower approach. According to an ECRI in-depth analysis by Judith Arnal, excluding multi-issuance stablecoins may destroy both consumer protection and EU competitiveness in the global digital asset market. The publication argued that MiCA’s credibility depends on clear guidance. She urged an immediate clarification from the commission, with further legal refinements needed in the meantime to avoid undermining MiCA’s effectiveness. 

Cryptopolitan flagged ESMA’s shortcomings in Malta’s crypto asset provider (CASP) license under MiCA regulation following the EU regulator review. The review found that the Malta Financial Services Authority approved the license despite unresolved governance, ICT, and Anti-money laundering concerns. ESMA argued that material issues such as conflict of interest and technology-related risks should have been addressed before rather than left for post-licensing supervision. The MFSA has since tightened its transparency rules, requiring firms to publish EU-specific, accurate, and fair licenses on their website. 

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