ECB Backs EU Proposal to Centralize Oversight of Crypto Firms

(AsiaGameHub) –   The European Central Bank (ECB) has endorsed a European Commission proposal to grant enhanced oversight authority over large crypto companies to the European Securities and Markets Authority (ESMA), providing new backing for a broader initiative to centralize supervision more effectively across the European Union.

This initiative also sparks a broader political debate. Critics argue that transferring more power from national regulators to ESMA isn’t just a matter of crypto policy—it’s another move away from national sovereignty and toward greater centralized control over financial operations. From their perspective, the plan could limit both personal financial liberty and the ability of individual EU member states to shape their own regulatory approaches.

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Good to Know

• The ECB stated that ESMA’s supervision of large cross-border crypto firms would help decrease regulatory fragmentation.
• Under the Markets in Crypto-Assets (MiCA) regulation, crypto companies can now obtain a license in a single EU country and offer their services throughout the bloc.
• The proposal is still subject to negotiations between EU member states and the European Parliament.

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ECB Adds New Momentum to ESMA’s Crypto Supervision Plan

The most significant change in the proposal is straightforward: national regulators will have less control over large crypto firms, while ESMA will gain more authority. In a non-binding opinion released on Friday, the ECB noted that placing systemically important cross-border market entities—including major crypto groups—under the purview of the Paris-based regulator would help reduce fragmentation and enhance financial stability.

This would represent a substantial shift in how MiCA operates in practice. Currently, crypto-asset service providers (CASPs) can establish themselves under a single national regulator and then offer their services across the EU via passporting. This framework has allowed firms to select more favorable licensing jurisdictions: for example, Kraken is based in Ireland, Coinbase and Bitstamp in Luxembourg, Bitpanda in Austria, and Bitpanda Asset Management in Germany.

The ECB contended that direct ESMA supervision of all CASPs would boost supervisory consistency, lower cross-border risks, and safeguard the integrity of the EU single market. It also highlighted that ties between banks and crypto firms are expanding—either through offering crypto services to customers or directly servicing crypto groups—thereby increasing the risk that disruptions in the crypto sector could spill over into the broader financial system.

Resistance to the plan is already emerging. Several smaller EU member states, including Malta, have pushed back, claiming the proposal is premature since MiCA’s rules for CASPs only took full effect in late 2024. Reuters has also documented broader concerns from nations like Ireland and Luxembourg about granting ESMA expanded direct supervisory powers.

Despite ECB support, the plan is still months away from becoming law. EU member states and legislators must now negotiate the broader legislative package before the European Parliament can advance it further. The ECB also emphasized that ESMA would require sufficient staffing and funding to effectively oversee major crypto firms directly.

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