ECB backs centralized oversight of major crypto firms

The European Central Bank (ECB) has indicated its support for the European Commission’s plan to bring the supervision of digital asset companies and other systemically important cross-border capital market companies under the European Securities and Markets Authority (ESMA).

On April 9, the ECB published an opinion addressing a host of proposals put forward by the European Commission (the Commission)—the European Union’s executive body—as part of a package aimed at greater integration of financial market in the bloc.

“The ECB fully supports the Commission proposals, which constitute an ambitious step towards deeper integration of capital markets and financial market supervision within the Union,” read the bank’s opinion.

Among the proposed changes is a measure that would centralize supervisory responsibility for systemically important cross-border capital market companies, such as large trading platforms and digital asset companies, under ESMA rather than the so-called National Competent Authorities (NCAs), the relevant regulators of each member state.

“The ECB welcomes the Commission proposal to strengthen the supervisory framework for crypto asset service providers (CASPs) by transferring authorisation, monitoring and enforcement powers for all CASPs from the NCAs to ESMA,” the ECB opinion read. “This measure will 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.”

ESMA would also assume responsibility for the enforcement of crypto-asset–specific market abuse rules, while credit institutions providing crypto-asset services would remain subject to the centralized banking supervision framework to preserve regulatory coherence.

The proposal aims to ensure consistent application and oversight of digital asset rules, notably those related to the Markets in Crypto-Assets (MiCA) regulation, which came fully into force last year. Since coming into force, several European lawmakers and national authorities have raised concerns about a perceived inconsistency in how MiCA is overseen across the 27-country bloc, particularly regarding the approval process for a CASP license.

The uniformity with which different NCAs have applied the rules, particularly in the license approval process, has been called into question.

The ECB’s seal of approval will be a boost to the Commission’s centralization plan, but it still faces opposition from some member states, including the popular MiCA licensing hub of Malta, who recently suggested it was a politically motivated move inspired by jealousy over the country’s success in attracting prominent digital asset firms, such as OKX and Crypto.com.

The package of proposals, of which the change to digital asset supervision is just one part, will still need to negotiate and then vote on in European Parliament. Meaning, if eventually does pass, it may not be until 2027 that the changes come into force.

A move toward greater consistency

Under MiCA, digital asset firms seeking to operate in the EU are required to obtain a MiCA license from a member state’s NCA. Some jurisdictions, especially smaller states with perceivably less regulatory resources, such as Malta and Luxembourg, have become hotspots for license applications and approvals, leading to what Marie-Anne Barbat-Layani, president of France’s financial services regulator (AMF), called a “race to the bottom” among regulators trying to lure in digital asset business.

The speed and frequency with which different countries handed out licenses raised questions about whether the regulation was being applied equally diligently by all. Last September, the French securities regulator hinted that it may even try to block companies that are licensed in other EU countries from operating in the country, over what it considers to be the inconsistent application of the EU’s licensing rules.

In response, in November of last year the Commission began mooting plans to re-centralize digital asset supervision under ESMA. On December 4, 2025, it adopted the “Market Integration and Supervision” package, aimed at removing barriers to an integrated capital market that arise from differences in regulatory approaches, as well as aiming to ensure that passporting functions efficiently to facilitate operations across member states.

It is a comprehensive and extensive package that addresses around eighteen existing pieces of legislation, including recentralizing regulatory authority of the digital asset space and reforming the EU’s distributed ledger technology (DLT) Pilot regime, which provides the legal framework for trading and settlement of transactions in crypto-assets that qualify as financial instruments.

Due to the breadth and significance of the legislative and regulatory shake-up the Commission is proposing, it has since been seeking input from important stakeholders and bodies that would be affected by the changes, including the ECB.

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ECB’s CASP opinion

In addition, it argued that significant CASPs should be expected to: apply enhanced internal controls and risk management arrangements, including for the management of conflicts of interests; adopt sound remuneration frameworks; require prior supervisory approval for directors and senior management appointments; and make enhanced disclosure and reporting at both entity and group level.

If taken up by the Commission, these more substantial obligations could prove a notable imposition to multinational digital asset firms operating in the EU.

Further, the ECB suggested that the MiCA criteria for determining significant CASPs be expanded to include “objective metrics of significance,” such as size, cross-border activity, systemic relevance, volume of trades for platforms, volume exchanged against funds, and consideration of group-wide activities.

To ensure a smooth and orderly transition to the proposed new oversight regime, the ECB suggested a carefully sequenced implementation of this transition.

“This can be achieved through a combination of measures, including transitional solutions in cooperation arrangements, the preparation of supervisory transition plans, the prioritisation of the transfer of specific critical responsibilities to ESMA, and, where appropriate, through staggered transitional arrangements with flexible timelines,” read the opinion.

Along with the proposal to give ESMA regulatory oversight of major digital asset players, the ECB also approved a complementary proposal that would change the governance and funding structure of ESMA, arguing that “it will be indispensable to ensure that ESMA has sufficient staffing and funding to enable it to carry out its extensive new direct supervisory powers.”

The ECB particularly backed the establishment of a new ESMA “Executive Board,” which would be responsible for decisions related to the direct supervision of financial market participants.

If this board comes into being, the ECB requested that it be a non-voting member of the board for discussions concerning CASPs, to “facilitate effective cooperation and coordination between the ECB and ESMA.”

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DLT pilot regime

Beyond oversight of the digital asset space, the Commission’s package of proposals included a plan to expand the EU’s pilot regime for market infrastructures based on DLT, including the introduction of a simplified regime for smaller DLT market infrastructures, the proposed adjustment of activity limits, and making credit institutions and CASPs eligible for the pilot.

The DLT Pilot Regime was set up in 2022 to test the use of blockchain technology for the tokenization of securities. According to ESMA, it provides the legal framework for trading and settlement of transactions in crypto-assets that qualify as financial instruments under MiFID II—the legal framework for securities markets in the EU—while facilitating the set-up of new types of market infrastructures.

The scheme started applying as of March 23, 2023, but had a relatively slow uptake, with no DLT market infrastructures being authorized in the first year.

Earlier this year, a group of European tokenization companies reportedly sent a joint letter to EU policymakers, urging them to remove constraints built into the pilot regime, including tight restrictions on asset eligibility, volume caps, and licensing limits that are disincentivizing firms that are already providing services in the U.S. from participating, arguing that current timelines risk leaving the EU behind in digital assets.

For this reason, as part of its proposed package, the Commission wants to expand the DLT pilot in the hopes of fostering increased participation, including making credit institutions and CASPs eligible to participate.

While the ECB said it supported the inclusion of credit institutions in the DLT pilot, “as that would open up the framework to a new range of regulated entities,” it had some concerns about the proposed inclusion of CASPs.

“CASPs currently operate under a lighter supervisory framework and lower, non-risk-sensitive own funds requirements,” the ECB said. “This is not consistent with allowing them to provide services relating to financial instruments, which are outside the scope of MiCAR and reserved for entities holding licences granted under more stringent and risk-sensitive requirements.”

MiCA currently governs CASPs as “service providers.” If CASPs were to be made eligible for the DLT pilot, it would let them become blockchain-based market infrastructure operators, opening up the possibility for large digital asset firms, particularly from the U.S., to move from intermediaries in European digital markets to operators of regulated financial infrastructure.

The possibility of a bigger role in market infrastructure for less stringently regulated firms is what appears to be giving the ECB pause for thought.

It will now be up to EU lawmakers in parliament to debate and approve the package of proposals.

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Watch: What’s ahead for crypto regulation? Highlights from Blockchain Futurist Conference 2025