EU wants more power for regulator ESMA: major consequences for crypto companies

The European Union is working on new rules that will significantly increase the power of market regulator ESMA. An internal document shows that the agency should have direct control over large financial infrastructures and independent crypto companies. Europe is thus moving towards a central supervisory model that comes closer to the American SEC.

ESMA will have direct control over ‘significant’ market players

According to the leaked working document, the European Commission wants to give ESMA the authority to directly regulate large clearing houses, central custodians, trading platforms and crypto companies.

The plans will be officially announced next month and are part of a wider strategy to allow capital to move more freely across the EU. By reducing national differences, Brussels hopes to stimulate economic growth.

The reform represents a fundamental shift. While the SEC has been taking direct action against companies in the United States for years, ESMA has until now mainly worked as a coordinator between national supervisors. The expansion of powers gives the European watchdog real power for the first time to directly manage multiple market sectors.

Pan-European licensing and direct crypto supervision

One of the core proposals is the introduction of the Pan-European Market Operator. This new permit would give companies free rein throughout the bloc with a single approval. ESMA will be the body that supervises these players.

In addition, ESMA will have direct power over independent crypto companies that operate cross-border. These are parties that do not fall under MiCA’s national supervision or that have a systemically important size. For these companies, there will be a new layer of European supervision on top of existing rules.

Large clearing houses, trading platforms and central securities depositories are also placed under ESMA if they are designated as “significant”. Smaller parties remain under national supervision.

The EU wants fewer differences between member states

The document emphasizes that Europe wants to eliminate national differences. ESMA could soon review new licenses from supervisors if a Member State has previously failed in supervision. In addition, the Commission wants to limit national policy freedom by more often laying down rules in direct EU regulations instead of directives.

The proposals are not yet final. Both the European Parliament and the Member States must agree before the package becomes law. Some countries have long resisted the increasing power of Brussels, while companies warn of additional regulations.

What does this mean for crypto?

This could mean a major shift for crypto companies in Europe. Until now, MiCA has determined that countries themselves supervise crypto companies, but with the new proposal, ESMA will soon be able to act directly.

This makes it easier for European crypto firms to operate in multiple countries, but also increases the chance of stricter and uniform supervision. International crypto exchanges and stablecoin issuers must take into account additional checks and possibly faster interventions in the event of violations.