ECB backs ESMA taking over supervision of major crypto firms

In a formal opinion published Friday, the European Central Bank wrote that it fully supports the European Commission’s proposal to move supervision of major cross-border crypto firms and large trading platforms from national regulators to the European Securities and Markets Authority (ESMA). The opinion said the change would strengthen integration of capital market supervision in the EU.

Under the Markets in Crypto-Assets (MiCA) rules, crypto-asset service providers, known as CASPs, can obtain authorization from one member state and operate across the bloc while ESMA issues standards and guidance. That arrangement has allowed firms to choose licensing hubs: Kraken established its EU arm in Ireland, Coinbase and Bitstamp in Luxembourg, and Bitpanda in Austria with its asset management arm licensed in Germany.

Some member states have opposed centralizing supervision. Malta has argued the proposal is premature because key MiCA provisions for CASPs only took full effect in December 2024.

The ECB wrote that transferring ‘authorization, monitoring and enforcement powers for all CASPs’ to ESMA would ‘ensure supervisory convergence, reduce fragmentation and mitigate cross-border risks in crypto-asset markets, thereby supporting financial stability and the integrity of the single market.’ The opinion also noted that banks are increasingly linked to crypto firms by offering crypto services or servicing crypto companies, which could transmit shocks into the wider financial system.

The document added there is a need for ‘a centralized Union supervisory regime for CASPs, capable of addressing the systemic risks posed by CASPs with significant activities, preventing risk migration into the banking system and safeguarding financial stability.’ It warned that ESMA would need adequate funding and staff to carry out direct supervision of large crypto firms.

The ECB’s opinion is nonbinding but provides a boost to the Commission’s proposal. EU lawmakers and national governments must still negotiate the measures, and the proposal could take months to pass through the legislative process before the European Parliament votes.

EU officials and market participants have argued centralizing supervision could limit license shopping and create a single rulebook for firms operating across the bloc. Officials expect that clearer, unified oversight would make enforcement more consistent and reduce the risk that failures in one country spill over into others.