ECB Backs Plan to Move EU Crypto Oversight to ESMA
The European Central Bank published a nonbinding opinion supporting a proposal to centralize crypto supervision under the European Securities and Markets Authority, ending the current system where firms can choose their preferred EU country for licensing.
Key Takeaway
EU moving toward single crypto supervisor to end regulatory shopping that let exchanges pick friendliest jurisdictions.
The European Central Bank published a nonbinding opinion backing the European Commission's proposal to transfer crypto supervision from national regulators to the European Securities and Markets Authority.
The move would end the current system where crypto companies can pick their preferred EU country for licensing while serving the entire bloc. Kraken chose Ireland for its EU operations, while Coinbase and Bitstamp both went with Luxembourg. Bitpanda set up in Austria with its asset management arm in Germany.
The ECB said transferring authorization, monitoring and enforcement powers for all crypto asset service providers to ESMA would ensure supervisory convergence, reduce fragmentation and mitigate cross-border risks in crypto markets. The central bank added that the trend of banks linking with crypto companies underscores the need for a centralized supervisory regime capable of addressing systemic risks and preventing risk migration into the banking system.
The proposal represents the most significant EU crypto regulatory overhaul since Markets in Crypto-Assets laws started coming into force in mid-2023. Malta opposed the plan as premature. The ECB noted ESMA would need sufficient funding and staff for the expanded role. The plan requires negotiation between EU lawmakers and governments before reaching the European Parliament, a process that began in mid-2023.
This article was written based on reporting from Cointelegraph.
