ESMA Targets Greater Control Over Crypto Markets

The European Securities and Markets Authority (ESMA) is taking steps to expand its direct supervisory powers across the crypto industry. The move would shift a large part of regulatory authority from national agencies to the EU level, creating a more unified oversight structure for digital assets.

This expansion follows the implementation of the Markets in Crypto Assets Regulation (MiCA), which came into force earlier this year. While MiCA already introduced Europe’s first comprehensive crypto framework, ESMA’s proposal goes further by seeking direct control over major exchanges and clearing houses that operate across borders.

A Push Toward Centralized Supervision

Under the proposed changes, ESMA would be able to directly license and monitor large crypto trading venues, custodians, and certain stablecoin issuers. Currently, these entities are regulated by national authorities such as BaFin in Germany or the AMF in France.

The agency argues that crypto markets, much like traditional financial markets, require consistent oversight to prevent regulatory gaps. Fragmented national supervision, according to ESMA, could lead to weak enforcement and inconsistent investor protection.

By moving oversight to the EU level, ESMA aims to reduce the risk of regulatory arbitrage and ensure that all operators follow uniform standards on transparency, risk management, and capital requirements.

Industry Concerns Over Bureaucracy and Innovation

Crypto firms are divided on the proposal. Some large exchanges welcome a single European license, which could simplify compliance and reduce costs of operating in multiple countries. Others warn that centralization may introduce unnecessary bureaucracy and slow innovation.

A representative from a leading European exchange commented anonymously that while harmonization is beneficial, “adding another layer of oversight could make Europe less competitive compared to other regions moving faster.”

Smaller startups in particular fear that stricter EU-level supervision could raise entry barriers, making it harder to obtain licenses or meet capital thresholds.

Balancing Investor Protection and Growth

ESMA’s proposal reflects the broader challenge facing European regulators: finding a balance between investor protection and market innovation. Following the collapse of several global crypto firms in 2022 and 2023, European policymakers have become more cautious about systemic risks in digital assets.

The regulator also plans to work with the European Banking Authority (EBA) and the European Central Bank (ECB) to coordinate supervision over stablecoins and payment tokens that could impact monetary stability.

This cross-agency cooperation is intended to prevent the type of jurisdictional confusion that often slows enforcement in the crypto sector.

What Comes Next

The proposal will undergo consultation among EU member states and the European Parliament in the coming months. If approved, ESMA could begin exercising its new powers as early as mid-2026.

Analysts expect that large international exchanges such as Binance, Coinbase, and Kraken will be the first to face direct ESMA licensing. The agency is also expected to expand its staff and create a dedicated crypto unit focused on surveillance, data analytics, and enforcement.

For now, the plan underscores a clear message from Brussels: Europe wants to lead the world in regulated digital finance, even if it means tightening control over one of its fastest-growing industries.