Brussels wants total power over European money

Inspired by the American SEC, the new ESMA wants to control cryptocurrencies, clearing houses and trading platforms considered vital

The European Union is about to promote one of the biggest reforms to its financial supervision structure since the 2008 crisis. A preliminary plan released by European authorities reveals that the bloc intends to significantly expand the powers of the European Securities and Markets Authority (ESMA)allowing the body to exercise a direct supervision over clearinghouses, depositories, “significant” trading platforms and cryptocurrency companies. The official announcement of the proposals should take place next month.

Created almost 15 years ago as a response to regulatory failures exposed by the global financial crisis, ESMA was born with the aim of coordinate national supervisors and define common standardswithout exercising the same type of broad supervision that characterizes bodies such as the United States Securities and Exchange Commission (SEC).

Now, however, the European Commission wants to transform the role of the agency, giving it centralized authority over segments considered strategic for the stability and integration of the bloc’s financial markets.

The working document that supports the proposal also provides for the creation of an independent executive boardresponsible for monitoring ESMA’s new structure and ensuring transparency and efficiency in the decisions of the reformulated body.

According to the European Commission, strengthening ESMA is part of a wider effort to facilitate the movement of capital between EU countriesboosting investments and stimulating economic growth.

The idea is to create a more integrated environment, where companies can operate across national borders without facing fragmented regulatory barriers.

Among the main measures planned is the creation of the Pan-European Market Operator (PEMO) statuswhich will allow companies to operate across the European Union with a single authorization. Furthermore, ESMA will now have direct supervisory powers over cryptocurrency companiesa rapidly expanding sector that has aroused growing concern among global regulators.

The document also proposes that the European authority take control over “significant” central clearing counterpartiescentral securities depositories, trading platforms and PEMOs, while smaller companies would remain under the responsibility of national authorities.

Another central point of the proposals is the strengthening harmonization between national supervisors. ESMA would gain the power to pre-review new approvals granted by local regulators in cases where a “supervision failure” has been identified.

Furthermore, the plan aims to reduce the margin of discretion of member countriestransferring parts of the rules currently defined by directives to a format directly applicable regulationthus ensuring greater uniformity within the block.

Although the project is still in its initial phase, it is already awakening divergent reactions between Member States. While France and EU institutions advocate centralization of supervision enthusiastically, other countries demonstrate resistance to cede national powers. The private sector also expresses concern about the possibility of new layers of bureaucracy and additional compliance costs.

The proposals still need to be evaluated and approved by the European Parliament and the Council of the European Unionwhich could generate adjustments and intense negotiations in the coming months. THE European Commission, for now, preferred not to comment officially the content of the document.

If approved, the changes will mark a new chapter in the financial integration of the European Unionbringing the European regulatory model closer to the North American one and signaling a clear attempt to make the single market more cohesive, competitive and resilient in the face of global economic and technological challenges.

With information from Bloomberg*