EU Markets Authority Moves to Regulate Crypto Companies

The European Union’s markets watchdog is set to begin monitoring cryptocurrency companies.

Verena Ross, chair of the European Securities and Markets Authority (ESMA), said the European Commission is drawing up plans that would move regulation of crypto firms, clearing houses and stock exchanges from national organizations to the authority, the Financial Times reported Monday (Oct. 6).

This switch would help bring about “a capital market in Europe that is more integrated and globally competitive,” she said, per the report.

The plans, which are the source of controversy in smaller countries such as Luxembourg and Malta, are designed to make sure “we are addressing the continued fragmentation in markets and resolve that to create more of a single market for capital in Europe,” Ross said, according to the report.

The EU initially wanted to make ESMA the chief regulator of crypto asset service providers, such as exchanges and custodians of digital currencies, when developing its landmark Markets in Crypto-Assets (MiCA) Regulation, which came into force this year, the report said.

That plan sparked criticism of ESMA’s ability to do the job, leaving the corrupt market regulated on the national level. This system is inefficient, Ross said, per the report.

ESMA in July criticized Malta’s process for approving licenses for crypto companies that covered the entire EU, saying “some risks areas were not adequately assessed during the authorization process” for one unnamed company, the report said.

“While we are doing a lot of work to try to make sure the implementation of MiCA is aligned, it clearly takes a lot of effort from us and the national supervisors to achieve that,” Ross said, per the report.

“It also means that people had to build up specific new resources and expertise 27 times in different national supervisors, which could have been done more efficiently once at a European level,” she added, according to the report.

Her comments came weeks after three national regulators in Europe, including France’s Autorité des Marchés Financiers (AMF), Italy’s Consob and Austria’s Financial Markets Authority, called on ESMA to take over supervision of major crypto firms.

In other crypto regulation news, the European Systemic Risk Board called last week for stronger regulations governing “multi-issuer” stablecoins, which are issued partly in the EU and partly in other jurisdictions.