EU Plans to Give ESMA Greater Powers Over Crypto and Stock Market Supervision

The European Commission is preparing sweeping changes that could hand over direct supervisory authority of stock exchanges, cryptocurrency firms, and clearing houses to the EU’s markets watchdog, the European Securities and Markets Authority (ESMA).

Key Takeaways:

• The European Commission plans to shift oversight of stock exchanges, crypto firms, and clearing houses to ESMA.
• ESMA argues that fragmented supervision under MiCA creates inefficiencies and weakens consumer protection.
• Smaller EU nations oppose the move, warning that centralizing power at ESMA could harm their local financial sectors.

Verena Ross, chair of ESMA, told the Financial Times that the proposed changes aim to resolve persistent fragmentation across the EU’s financial sector and create a more unified capital market.

“This would provide a key impetus towards having a capital market in Europe that is more integrated and globally competitive,” she said.

Under the proposals, regulation of several financial market sectors currently overseen by national authorities would shift to ESMA.

This includes crypto asset service providers, such as exchanges and custodians, who are currently regulated under the EU’s landmark Markets in Crypto-Assets (MiCA) framework. The initial plan was to grant ESMA central oversight, but concerns about capacity led to supervision remaining with individual member states.

Ross said this decentralization has resulted in inefficiencies and inconsistent application of MiCA. “It clearly takes a lot of effort from us and the national supervisors to achieve alignment,” she noted.

“Specific new resources had to be built up 27 times, once in each member state, which could have been done more efficiently at a European level.”

In July, ESMA criticized Malta’s licensing process for pan-EU crypto companies, warning that certain risk areas had not been adequately assessed.

The agency argues that fragmented supervision undermines consumer protections and investor confidence.

The initiative is already drawing resistance from smaller EU countries like Luxembourg, Ireland, and Malta.

Claude Marx, head of Luxembourg’s financial regulator, recently warned that centralizing powers at ESMA could create a regulatory “monster.”

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Still, the European Commission is moving forward. Maria Luís Albuquerque, EU Commissioner for Financial Services, confirmed in a recent speech that the bloc is evaluating a formal proposal to transfer oversight of cross-border entities, including stock exchanges and crypto platforms, to ESMA.

The Paris-based authority is already set to supervise consolidated equity and bond price tapes and ESG ratings starting in 2026.

Ross emphasized the need for capital markets to support the EU’s long-term goals, including defense, green energy, and digital infrastructure.

“The demand for breaking down barriers has gone up a level, not just at the EU level but within member states too,” she said.

In July, ESMA raised concerns about Malta’s crypto licensing process, following a peer review of the Malta Financial Services Authority (MFSA).

While acknowledging that the MFSA has adequate staffing and sector expertise, the review found that Malta only “partially met expectations” in its authorization of a crypto asset service provider (CASP), with several material issues left unaddressed during the approval stage.

The review, initiated in April 2025 by ESMA’s Peer Review Committee, focused on the MFSA’s supervisory setup, authorization procedures, and oversight tools.

ESMA emphasized that consistency across EU member states is essential under the MiCA regulatory framework, which seeks to standardize how crypto firms are licensed and supervised throughout the bloc.

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