EU Eyes Centralized Financial Supervision to Rival US

The European Commission is developing plans to enhance the competitiveness of the bloc’s capital markets by proposing to bring stock and cryptocurrency exchanges under central supervision. This move aims to simplify the fragmented regulatory landscape across the EU.

Key Proposal and Rationale

• The upcoming proposal would significantly expand the authority of the European Securities and Markets Authority (ESMA).
• ESMA’s new jurisdiction would include:
  • Stock and crypto exchanges.
  • Crypto asset service providers.
  • Other trading infrastructure.
• The current system, with numerous national and regional regulators, increases the cost of cross-border trade and stifles startup growth.
• Empowering a single body, similar to the US Securities and Exchange Commission (SEC), is seen as the logical “next step” for the EU’s “capital markets union.”
• European Central Bank (ECB) President Christine Lagarde publicly supported this concept in November 2023, suggesting an expansion of ESMA’s powers for direct supervision to mitigate systemic risks from large cross-border firms.

Addressing Fragmentation and MiCA Concerns

• The proposal is also intended to address “continued fragmentation in markets,” according to ESMA chair Verena Ross, who confirmed the commission’s plans in October.
• A single supervision model would tackle concerns related to the Markets in Crypto-Assets Regulation (MiCA).
• Under MiCA, which takes effect for crypto asset service providers in December 2024, companies can get a license in one EU country and “passport” it to operate across the entire 27-nation bloc.
• This has led to concerns about crypto service providers seeking licenses in the most lenient regulatory jurisdictions.
• France has already threatened to ban MiCA’s license “passporting” and, along with Austria and Italy, has called for the Paris-based ESMA to take over supervision of major crypto companies.

Next Steps

The Commission is expected to publish a draft proposal in December. Additionally, the plan would enable ESMA to issue binding decisions to resolve disputes between asset managers, even without direct supervision.

November 2025, Cryptoniteuae