EU Crypto Regulations Struggle to Balance Centralized Oversight with Regional Knowledge

The European Commission is advocating for a major transformation in how cryptocurrencies are regulated across the EU, suggesting that the European Securities and Markets Authority (ESMA) should take on direct supervision of all crypto businesses within the union. This would move away from the current Markets in Crypto-Assets (MiCA) system, which relies on national regulatory bodies,

, limited resources, and the risk of derailing MiCA’s scheduled rollout.

At present, MiCA requires crypto companies to obtain approval in one EU country, allowing them to operate throughout the bloc using a "passporting" mechanism. National authorities have spent years preparing for this approach, with the transition period ending in 2026.

Yet, the Commission’s new draft would shift much of this responsibility to ESMA, including the authority to grant licenses to new market participants. Although ESMA could assign certain duties to national agencies, the influence of local supervisors.

Industry stakeholders have voiced significant concerns. Robert Kopitsch, secretary general of Blockchain for Europe,

could undermine its launch, introduce uncertainty in the law, and pull resources away from ensuring consistent enforcement. He pointed out that national regulators have more frequent, hands-on interactions with crypto firms, a relationship ESMA would struggle to match. Likewise, Andrew Whitworth of Global Policy Ltd. to take on the responsibilities currently handled by national authorities.

This initiative is part of a broader push by EU lawmakers to unify oversight of financial markets, such as extending ESMA’s jurisdiction over clearing entities and trading platforms.

, with Bank of France Governor François Villeroy de Galhau stating that centralized supervision would help close regulatory gaps and ensure uniform application of MiCA. ESMA Chair Verena Ross has also suggested that a unified model could improve efficiency, is the best solution.

Nonetheless, critics argue that the timing of this proposal is problematic. National regulators are already dealing with the challenges of putting MiCA into practice, and transferring duties to ESMA might slow down approvals and make compliance more difficult for companies. In July 2025,

regarding Malta’s process for issuing crypto licenses, emphasizing the importance of strict regulatory standards.

The proposal, which remains in draft status, still needs the backing of both the European Parliament and the Council of member states. If enacted, it could represent a significant change in how the EU manages financial regulation, aiming to balance centralized control with the need for local adaptability. For now, the discussion highlights the ongoing struggle between achieving regulatory efficiency and addressing the complex realities of a diverse and high-risk sector.