EU regulatory overhaul faces industry pushback
The European Commission’s latest proposal to expand ESMA’s powers is generating mixed reactions across the crypto sector. I think the plan has some clear intentions behind it—trying to create more uniform standards across member states—but the execution details worry many people working in the industry.
What’s happening is that ESMA, the European Securities and Markets Authority, would get direct supervisory control over crypto-asset service providers, trading venues, and central counterparties. That includes both supervision and licensing authority. The Commission published this package on Thursday, and it’s now up for negotiation with the European Parliament and the Council.
Licensing concerns emerge
Faustine Fleuret from Morpho expressed particular concern about ESMA handling both authorization and supervision. “I am even more concerned that the proposal makes ESMA responsible for both the authorisation and the supervision of CASPs, not only the supervision,” she told Cointelegraph. The worry here is that a centralized licensing system might actually slow things down rather than speed them up.
Startups could face longer wait times for approvals, which might hinder development. That’s a legitimate concern when you’re trying to compete in a fast-moving industry. The European crypto market needs to keep pace with innovation, not get bogged down in bureaucratic processes.
Broader market ambitions
The proposal isn’t just about crypto, though. It’s part of a larger effort to make EU capital markets more competitive with the United States. The numbers tell a pretty stark story: US stock markets are worth about $62 trillion, while EU markets sit around $11 trillion. That’s a significant gap the Commission wants to address.
Elisenda Fabrega from Brickken made an interesting point about execution. “Ultimately, the effectiveness of this reform will depend less on its legal form and more on its institutional execution,” she noted. ESMA’s operational capacity, independence, and how it cooperates with member states will be crucial factors.
Looking ahead
If this proposal gets adopted, ESMA’s role would start looking more like the US Securities and Exchange Commission. That centralized framework concept was first proposed by ECB President Christine Lagarde back in 2023. It represents a significant shift from the current system where national regulators have more autonomy.
The Commission argues that centralizing oversight would address differences in national supervisory practices and uneven licensing regimes across member states. But the crypto industry seems worried about potential slowdowns and reduced flexibility.
What happens next depends on the negotiations. The proposal still needs approval from both the European Parliament and the Council. Different stakeholders will likely push for different changes during this process. Industry representatives will probably advocate for provisions that maintain some flexibility for innovation while ensuring proper oversight.
It’s a balancing act, really. The EU wants stronger, more unified capital markets, but the crypto sector needs room to grow and innovate. How these competing priorities get resolved will shape the regulatory landscape for years to come. The coming negotiations will be worth watching closely.
