The EU is considering entrusting the ESMA with
surveillance of the crypto and stock markets

The European Commission is considering expanding the powers of the European Securities and Markets Authority (ESMA) to supervise both cryptocurrency and traditional financial markets. This proposal could give ESMA direct oversight of cryptocurrency exchanges and crypto service providers, creating a system similar to that of the US Securities and Exchange Commission (SEC). A draft text is expected in December.

ESMA's expanded role is based on guidelines published in April 2025 for national regulators on detecting and preventing market abuse under MiCA. These rules emphasize risk-based supervision and cross-border coordination, providing a framework for more consistent oversight across all EU Member States.

The MiCA passport system faces potential risks.
Currently, under the Markets in Crypto Assets Regulation, companies authorized in one EU country can operate in all 27 Member States through a "passport" system. Some experts warn that transferring full decision-making power to ESMA could stifle innovation in cryptocurrencies and financial technologies.

Faustine Fleuret, of the decentralized lending protocol Morpho, said that centralizing oversight would "require significant human and financial resources" and suggested giving ESMA stricter control over national regulators.

France challenges EU rules on crypto passports

Concerns have surfaced about gaps in the enforcement of these rules. In September, the French regulator hinted that it might block the issuance of crypto passports, raising doubts about the uniform application of these rules across the EU.

Ms. Fleuret said the passport system was "the cornerstone of EU financial regulation" and essential for maintaining Europe's competitive advantage for crypto companies.

Ms. Lagarde supports the creation of a single EU supervisory body.

Other analysts believe that a larger role for ESMA could be a step towards regulatory consistency. Dea Markova, of the digital asset custody platform Fireblocks, said that centralised supervision could help address licensing, cybersecurity, and operational risk issues, but that its effectiveness depends on proper implementation and resource allocation.

European Central Bank President Christine Lagarde has also expressed support for a single EU supervisory body, echoing proposals similar to the SEC model.

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