ECB Backs ESMA Power Grab in New EU Crypto Oversight Plans

The European Central Bank has thrown its support behind a sweeping proposal that could dramatically reshape how crypto firms are regulated across the European Union.

In a recently published opinion, the ECB endorsed a plan from the European Commission to move supervisory authority over major crypto companies away from individual member states and into the hands of the bloc’s financial markets watchdog, the European Securities and Markets Authority.

The proposal targets large, cross-border financial players — including crypto trading platforms — and is being framed as a critical step toward unifying oversight across the EU. According to the ECB, centralizing supervision would help eliminate regulatory fragmentation and strengthen financial stability throughout the region.

This marks a potential evolution of the existing framework established under the Markets in Crypto-Assets Regulation, which began rolling out in 2023. Currently, crypto-asset service providers (CASPs) can obtain licenses from individual EU countries and operate across the bloc, while ESMA provides guidance but not direct supervision.

That system has encouraged firms to establish themselves in jurisdictions perceived as more favorable. Major players have already positioned themselves strategically across Europe, taking advantage of differing regulatory environments.

However, not all member states are on board with the proposed overhaul. Countries like Malta — a popular destination for crypto licensing — argue that the reforms may be premature, especially since MiCA rules for CASPs only fully took effect in late 2024.

Despite the pushback, the ECB believes centralizing authority under ESMA could better address systemic risks, particularly as traditional banks deepen their involvement with crypto firms. The growing ties between the two sectors, the bank warned, could amplify financial shocks if not properly managed.

To make the transition effective, the ECB emphasized that ESMA would require expanded resources, including additional funding and staffing, to handle the increased regulatory burden.

While the proposal still faces months of negotiations among EU lawmakers and member states before any final decision is made, it signals a clear direction: a more unified and centralized approach to crypto oversight may soon define the European market.