The European Commission is pushing a new plan around ESMA for crypto as part of a broader effort to streamline financial supervision across the European Union.
Commission proposal to centralize crypto supervision
The European Commission, executive arm of the European Union (EU), has proposed ending national supervision of crypto companies and transferring those responsibilities to the bloc’s main markets regulator.
Under the plan, oversight would move from the 27 individual member states to the European Securities and Markets Authority (ESMA). The proposal, outlined in a statement published on Thursday, is billed as part of a wider push to “fully integrate” EU financial markets and reduce regulatory fragmentation.
According to the Commission, this change would address discrepancies created by differing supervisory practices among EU countries. Moreover, it argues that centralizing supervision at ESMA would make oversight “more effective and conducive to cross-border activities” for crypto service providers.
MiCA context and integration of financial markets
The initiative comes against the backdrop of the Markets in Crypto-Asset (MiCA) regulation, which was designed to create a unified regulatory framework for digital assets across the EU. However, recent reports highlighted that member states were interpreting and implementing MiCA in divergent ways, raising MiCA implementation concerns among policymakers.
ESMA has signaled unease about these differences, warning that inconsistent national approaches could undermine the goal of a single European crypto rulebook. That said, the Commission now believes that bringing the transfer crypto oversight process directly under ESMA for crypto and other financial services would be more effective than the current patchwork.
“EU financial markets remain significantly fragmented, small and lack competitiveness, missing out on potential economies of scale and efficiency gains,” the Commission said in its statement dated Dec 5, 2025. Moreover, it stressed that greater centralization could support deeper capital markets and more efficient supervision.
Role of ESMA and reactions from national regulators
ESMA currently acts as the EU’s closest equivalent to the U.S. Securities and Exchange Commission (SEC). However, its remit is largely focused on coordination and setting technical standards, while most direct supervision is carried out at the national level.
The Commission’s plan to grant ESMA new “direct supervisory competences” over crypto firms and other financial entities would mark a significant shift. In practice, this could move the EU closer to having a single, powerful markets watchdog resembling a European SEC, even though the institutional mandates remain different.
National watchdogs have themselves pressed for a stronger central role. In September, regulators such as France’s AMF, Austria’s FMA and Italy’s Consob publicly raised national regulators concerns about how MiCA was being rolled out. Moreover, they asked ESMA to take tighter control of the framework to avoid regulatory arbitrage.
Next steps in the EU legislative process
The proposal to overhaul european union crypto regulation does not take immediate effect. Instead, it must go through the EU’s ordinary legislative procedure, which requires negotiations with the European Parliament and the Council of the EU before any new powers are granted.
Lawmakers in the European Parliament will examine how the new model aligns with the broader objectives of capital markets union and whether it preserves sufficient roles for national authorities. However, many in Brussels argue that stronger cross border crypto supervision is necessary to match the increasingly international nature of digital asset businesses.
As the debate unfolds, the Commission maintains that consolidating oversight at ESMA will better support integrated markets, clearer rules for companies and more consistent protection for investors across the bloc.
In summary, the push to hand more authority to ESMA reflects a broader ambition to reduce fragmentation in EU financial markets, standardize supervision of crypto firms and bolster the competitiveness of Europe’s capital markets.
Source: https://en.cryptonomist.ch/2025/12/05/esma-crypto-centralization-eu/
