The European Commission is considering expanding the powers of the European Securities and Markets Authority to oversee cryptocurrency and traditional capital markets. The plan could give ESMA direct supervision over exchanges and crypto service providers, creating a system similar to the US SEC. A draft is expected in December.
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The expanded role of ESMA builds on guidelines issued in April 2025 for national regulators on detecting and preventing market abuse under MiCA. The rules emphasized risk-based supervision and cross-border coordination, providing a framework for more consistent oversight across EU member states.
MiCA Passport System Faces Potential Risks
Currently, under the Markets in Crypto-Assets Regulation, companies licensed in one EU country can operate across all 27 member states through a “passport” system. Some experts warn that shifting decision-making entirely to ESMA could slow innovation in crypto and fintech.
Faustine Fleuret of decentralized lending protocol Morpho said centralizing oversight “would demand vast human and financial resources” and suggested giving ESMA stronger oversight over national regulators instead.
???????? NEW: The European Commission is drafting a proposal to give ESMA SEC-like oversight over crypto and stock exchanges, with draft expected in December.Could this make the EU more crypto-friendly or stifle innovation? pic.twitter.com/JiYNBz3pXv
— Cointelegraph (@Cointelegraph) November 2, 2025
France Challenges EU Crypto Passport Rules
Concerns over enforcement gaps have surfaced. In September, France’s regulator signaled it might block the passporting of crypto licenses, raising doubts about uniform application across the EU.
Fleuret said the passport system is “the cornerstone of EU financial regulations” and key to maintaining Europe’s competitive advantage for crypto firms.
Lagarde Backs Single EU Supervisory Body
Other analysts view a larger role for ESMA as a potential step toward regulatory consistency. Dea Markova from digital asset custody platform Fireblocks said centralized supervision could help address licensing,cybersecurity, and operational risks, but its effectiveness depends on proper implementation and resourcing.
European Central Bank President Christine Lagarde has also expressed support for a single EU supervisory body, echoing proposals similar to the SEC model.
This article was written by Tareq Sikder at www.financemagnates.com.
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