The plan aims to create a more unified “capital markets union,” reduce regulatory fragmentation, and make Europe’s markets more competitive with the US. The move is also supported by ECB President Christine Lagarde, and could help with the growing concerns over inconsistent enforcement under the MiCA framework.
EU Eyes Central Regulator to Oversee Crypto
The European Commission is preparing a major reform that could place both stock and cryptocurrency exchanges under centralized EU supervision. This could become one of the most significant overhauls of Europe’s financial regulation in years.
According to a report from the Financial Times, the proposal will expand the authority of the European Securities and Markets Authority (ESMA) to include direct oversight of exchanges, crypto asset service providers, and other trading infrastructure. The goal is to make Europe’s capital markets more competitive with those in the United States and to streamline cross-border trading.
Currently, the EU’s financial landscape is fragmented across dozens of national and regional regulators, which increases compliance costs and complicates market access. By empowering a single body similar to the US Securities and Exchange Commission (SEC), the bloc hopes to build a “capital markets union” that is capable of supporting larger and more efficient capital flows across member states.
European Central Bank President Christine Lagarde publicly endorsed this direction, and said that “creating a European SEC, for example, by extending the powers of ESMA, could be the answer.” She added that such a regulator will need a broad mandate to mitigate systemic risks from large cross-border firms.
European Central Bank President Christine Lagarde
Sources told the FT that the European Commission plans to publish a draft of the proposal in December. The legislation would not only expand ESMA’s supervisory powers but will also allow it to issue binding decisions in disputes between asset managers, effectively giving it the final word on regulatory disagreements across the bloc.
The move comes during a time of growing tension over how crypto regulation should be implemented under the Markets in Crypto-Assets Regulation (MiCA) framework. France’s financial regulator warned that it may block “passporting” — the ability for a crypto firm licensed in one member state to operate across the entire EU — over fears that companies might exploit lenient jurisdictions. France, Austria, and Italy have all backed the idea of handing ESMA direct control over large crypto firms to ensure more consistent enforcement.
MiCA officially took effect for crypto-asset service providers in December of 2024. However, enforcement so far has been in the hands of national regulators, which led to concerns about uneven application of the rules.
Overall, the proposed reform suggests that the EU is recognising that a fragmented supervisory framework is holding back its financial competitiveness.
