European Commission Proposes ESMA to Oversee Crypto Like SEC in US
The European Commission has proposed transferring direct supervision of all crypto asset service providers to the European Securities and Markets Authority (ESMA), granting it powers similar to the US Securities and Exchange Commission (SEC). This move aims to reduce fragmentation across the 27 EU member states.
Under the proposal, ESMA would be responsible for directly authorizing crypto firms to operate across the EU, replacing the current passporting system. It would oversee significant trading venues, central counterparties, and central securities depositories, and introduce a Pan-European Market Operator licensing format.
The package also includes amendments to the Distributed Ledger Technology (DLT) Pilot Regulation to increase proportionality and provide legal certainty for blockchain adoption. Additionally, directives would be converted into regulations to reduce national discretions and regulatory gold-plating.
There is support from several member states and authorities: France backs the centralization of supervision, with the Governor of the Bank of France warning about regulatory loopholes under the current passporting system. Germany has signaled openness to the expanded ESMA powers. European Central Bank (ECB) President Christine Lagarde has endorsed centralized supervision, and ESMA Chair Verena Ross has urged for centralized resources to better manage EU-wide crypto regulation.
