Quick Take

The European Central Bank on Friday formally backed the European Commission's plan to centralize supervision of major EU financial market participants, including crypto asset service providers (CASPs), under the watchdog European Securities and Markets Authority (ESMA), according to Reuters.

In its opinion published April 9, the ECB said it "fully supports" the Commission's proposals, calling them an ambitious step toward deeper integration of EU capital markets. The plan would move oversight of systemically important cross-border players, including large CASPs, trading venues, central counterparties, and central securities depositories, to the Paris-based ESMA.

The proposal is the most consequential structural change to EU crypto oversight since the bloc's Markets in Crypto-Assets framework (MiCA) became fully applicable for CASPs at the end of 2024. Under the current MiCA regime, national competent authorities have served as front-line supervisors with ESMA playing a coordinating role. The Commission's package, unveiled in December, would for the first time give ESMA direct supervisory authority over the largest cross-border firms.

The ECB argued that large crypto firms can be "systemically relevant" and warrant unified oversight to prevent risks from spilling into the banking system. It also asked for a non-voting seat on ESMA's executive board to contribute technical expertise on payment systems and monetary policy transmission.

The central bank cautioned, however, that ESMA will need significantly more resources to handle the expanded mandate, and recommended a gradual handover from national regulators to limit operational disruption.

"A more integrated financial system would also help mitigate financial fragmentation and support the effective transmission of monetary policy across the euro area," the opinion states. "Additionally, a more integrated financial system with broader, deeper and more liquid markets may increase diversification possibilities."

National licensing has produced uneven outcomes. Major exchanges have routed their MiCA authorizations through specific jurisdictions, with Coinbase securing its license via Luxembourg and OKX and Gemini through Malta, while Kraken built out its EU derivatives stack using a MiCA license from the Central Bank of Ireland alongside a Cypriot MiFID entity.

ESMA has previously warned that "the EU is not a place for forum-shopping," and has separately flagged concerns that some firms have given misleading impressions of their MiCA status.

That dynamic helps explain the political resistance. Ireland, Luxembourg, and Malta, all home to substantial CASP licensing activity, have expressed reservations about handing oversight to Paris, arguing it could weaken national supervisors and the financial sectors that have grown around them. The ECB's opinion is non-binding, and the proposal now enters negotiations between EU member states and the European Parliament, expected to last several months.