The European Central Bank has backed a European Commission proposal to transfer supervision of systemically important crypto firms and cross-border trading platforms to the European Securities and Markets Authority (ESMA), the EU's central markets regulator.
The move would shift authorisation, monitoring and enforcement powers over crypto-asset service providers (CASPs) away from national regulators, which currently oversee firms operating under the Markets in Crypto-Assets (MiCA) framework while ESMA sets industry-wide standards.
The ECB said in a formal opinion that centralising supervision under ESMA would "ensure supervisory convergence, reduce fragmentation and mitigate cross-border risks in crypto-asset markets, thereby supporting financial stability and the integrity of the single market."
The central bank cited specific examples of firms that have gravitated towards favourable licensing jurisdictions, naming crypto exchange Kraken in Ireland and rivals Coinbase and Bitstamp in Luxembourg.
The ECB also warned that deepening links between banks and crypto firms risked transmitting "shocks into the financial system," and called for a centralised supervisory regime capable of "preventing risk migration into the banking system and safeguarding financial stability."
It added that ESMA would require adequate funding and additional staff to assume direct supervisory responsibilities at the scale envisaged.
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Not all member states are supportive: Malta, which has positioned itself as a crypto-friendly jurisdiction, has criticised the proposal as premature given that MiCA only recently came into full effect.
The plan is non-binding at this stage and is expected to remain under negotiation between EU lawmakers and member state governments for several months before the European Parliament advances it further.The recap
- ECB backs shifting supervision of major crypto firms to ESMA
- Major CASPs chose Ireland, Luxembourg, Austria and Germany licenses
- EU lawmakers and governments will negotiate the proposal further
