Seeking to centralize oversight, the European Commission is preparing measures to place supervision of crypto exchanges and major trading venues under the European Securities and Markets Authority (ESMA), a move intended to replace the current patchwork of national approaches with a single, coherent supervisory model. The proposal aims to harmonize fragmented regulatory frameworks across the 27 EU member states, reducing the complexity firms face when operating cross-border, and drawing on the US Securities and Exchange Commission model for centralized oversight. The EC frames the change as a means to bolster investor confidence and market stability, while also creating conditions conducive to innovation by providing predictable rules for digital asset firms. The Commission has signaled that a draft proposal describing the expanded role is expected in December. ESMA expansion This approach aligns with MiCA’s goal to ensure uniform application of crypto regulations across member states.
The European Commission seeks to centralize crypto-exchange oversight under ESMA to harmonize rules and boost investor confidence
ESMA’s expanded authority would include direct supervision of stock exchanges, cryptocurrency trading platforms, clearinghouses and major trading infrastructures, and the proposal envisions enforcement powers capable of issuing final decisions in disputes that currently fall between national regulators. The design seeks to mitigate systemic risks posed by large, cross-border crypto companies by enabling a single supervisor to monitor interconnected exposures and market conduct, thereby supporting efforts to integrate capital markets and enhance competition within the EU. The authority’s enhanced mandate would also extend to crypto asset service providers, aligning oversight of digital asset activities with traditional financial market supervision.
The current environment is characterized by significant fragmentation, with Markets in Crypto-Assets Regulation implemented unevenly by national authorities, which increases operational costs and compliance burdens for firms seeking to scale across member states. Disparate enforcement creates gaps that can be exploited for regulatory arbitrage, and these variations have prompted concerns from several member states about the effectiveness of passporting under MiCA. Centralized supervision is promoted as a remedy to guarantee uniform application of rules, close enforcement loopholes, and provide clear accountability for cross-border oversight.
Stakeholder views are mixed, with proponents noting that a unified model could attract investment and simplify compliance, while critics caution that centralization must preserve proportionality and local market knowledge. The proposal will require political negotiation to balance national prerogatives with the objective of a harmonized, transparent regulatory framework.
