EU Eyes SEC-Style Regulator To Oversee Stock And Crypto Exchanges Across The Bloc

The European Commission is considering a Securities and Exchange Commission (SEC)-style regulator by giving the European Securities and Markets Authority (ESMA) direct oversight of stock and crypto exchanges.

According to a Financial Times report that cited people familiar with the matter, an upcoming draft proposal that is expected by December would expand ESMA’s powers to supervise stock and crypto exchange platforms, crypto asset service providers, and other trading-focused infrastructure. It would expand ESMA’s jurisdiction to grant it authority to resolve disputes between asset managers.

ESMA Chair Verena Ross said the upcoming proposal seeks to address “continued fragmentations in markets” and create a unified capital market across Europe. She confirmed last month that the commission plans to transfer oversight of the financial sector from national regulators to the ESMA. 

A Possible Solution To A MiCA Loophole

The European Union has been trying to move towards creating a unified regulatory framework for digital assets, and has already launched the Markets in Crypto-Assets (MiCA) regulation back in December 2024. 

MiCA was created to cover crypto assets that are not already covered by existing EU financial services laws, including ones for securities, deposits and insurance. The framework essentially creates rules for crypto assets and service providers in the industry such as exchanges and custodians. 

It also introduces a passporting regime across EU member states for authorized service providers. With this “passport,” companies that are authorized in one member state can use the license to operate across the 27-nation bloc.

However, that has led to concerns that crypto service providers might seek licenses under more lenient regulatory jurisdictions. Amid the concerns, France’s securities regulator has threatened in September this year to ban crypto license “passporting” under the MiCA regulation. 

SEC Oversees Crypto In The US, But Trump Plans To Give CFTC Broader Supervision

While the European Commission moves toward an SEC-like body, the Trump administration has expressed plans to give the US Commodity Futures Trading Commission (CFTC) broader oversight of the crypto industry. 

Currently, the SEC regulates securities under laws like the Securities Act of 1933 and the Securities Exchange Act of 1934. Many projects and tokens in the crypto space fall under the SEC’s oversight if they meet a test for an “investment contract.” 

Meanwhile, the CFTC regulates commodities and derivatives under the Commodity Exchange Act.

Under the previous Biden administration, the SEC argued that all cryptos were securities, a stance that’s shifted since Trump appointed pro-crypto Paul Atkins to chair the regulator. 

The debate around whether some cryptos are securities or commodities is, however, still ongoing . US regulators are subsequently working on legislation that will help classify each token or project. 

Trump also established a White House working group for digital assets, which has since passed down recommendations on how to regulate the crypto market to the SEC and CFTC. Both agencies have started acting on the recommendations.

Executive order establishing the White House digital asset working group (Source: White House)