The European Union may soon move toward significantly more centralized oversight of the cryptocurrency market. The European Central Bank (ECB) has backed a proposal that would give a single European regulator control over major crypto companies. If the plan passes, it would represent the most substantial intervention in market operations since the MiCA rules were introduced.
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ECB Supports Transfer of Powers
In its latest statement, the ECB stated that it fully supports the European Commission’s intention to transfer oversight of significant crypto market players to the European Securities and Markets Authority (ESMA). According to the central bank, this is a step that can strengthen the integration of capital markets and unify financial sector supervision across the European Union.
The fundamental change would primarily affect major crypto companies with cross-border operations – such as exchanges or service providers serving clients in multiple EU member states.
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MiCA Enabled Growth, But Also Imbalance
The current regulatory framework is based on the MiCA regulation, which began entering into force in mid-2023 and has been fully applicable to service providers since December 2024. It allows companies to obtain a license in one member state and subsequently operate throughout the European Union.
However, oversight remains in the hands of national regulators, which has led crypto firms to choose jurisdictions with more favorable conditions. Some major companies have established themselves in Ireland or Luxembourg, while others have utilized Austria or Germany. According to critics, this model encourages so-called regulatory arbitrage and contributes to market fragmentation market.
The Goal is Stability and Lower Risks
The ECB’s statement warns that growing interconnection between the banking sector and cryptocurrencies increases systemic risks. Banks are increasingly offering crypto services or providing services to crypto companies, which means potential problems can spill over into the traditional financial system.
Centralized oversight under ESMA would help ensure more uniform rules, reduce market fragmentation, and limit cross-border risks, according to the central bank. It should also prevent risks from the crypto sector from spilling over into the banking system.
The ECB also emphasizes that if ESMA is to take on this role, it will need to be significantly strengthened – both financially and in terms of personnel.
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Not All Member States Support It
The proposal has faced resistance from some member states, however. Critics, including Malta, point out that it is too early for such a change. MiCA rules only recently became fully applicable, and according to them, they should be given more time to demonstrate how they work in practice.
The debate thus reflects a broader dispute between efforts to centralize supervision at the EU level and the preservation of individual member states’ powers.
Change is Still Far Off, But Significant
The ECB’s statement is not legally binding, yet it carries considerable weight and can significantly advance the entire proposal. However, the legislative process will still take time – the proposal must go through negotiations between member states and European institutions before it reaches its final form and potentially enters into force.
If approved, it would mean a fundamental transformation of the European crypto market. It would move from the current model, where national regulators play the main role, to a centralized system with unified oversight. For investors and companies, this could mean greater predictability, but also stricter controls.
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