ESMA's Power Grab Could Derail Europe's Crypto Rulebook—Here's Why Industry Insiders Are Panicking

The EU is considering a regulatory overhaul that could reshape how cryptocurrencies are supervised across the bloc. Instead of the current decentralized approach through national regulators, the European Commission is pushing for the European Securities and Markets Authority (ESMA) to centralize crypto oversight and license all crypto businesses directly. The problem? Most stakeholders think this is a recipe for disaster.

The Current System Works—Sort Of

Under the existing Markets in Crypto-Assets (MiCA) framework, crypto firms only need approval from one EU country to operate everywhere through a “passporting” mechanism. National authorities have spent years preparing for the full MiCA transition, which wraps up in 2026. But the Commission’s new proposal would hand control to ESMA, stripping national regulators of much of their power.

Why This Spooks the Industry

Andrew Whitworth from Global Policy Ltd. argues that ESMA would face an impossible resource challenge. Taking on licensing authority, direct supervision, and compliance monitoring would require what Whitworth describes as a “substantial increase in resources”—resources ESMA simply doesn’t have today. Meanwhile, Robert Kopitsch, secretary general of Blockchain for Europe, warns that revisiting MiCA now could undermine its entire launch, introduce legal uncertainty, and drain resources from enforcement.

Here’s the critical issue: national regulators interact with crypto firms constantly and know the local landscape. ESMA operates at a distance and would struggle to replicate that relationship.

The Centralization Case (and Why It Might Not Stick)

France and some EU lawmakers see centralized supervision as the solution to regulatory gaps and inconsistent MiCA application. ESMA Chair Verena Ross has suggested that 27 separate national regulators might not be the most efficient model. On paper, unified oversight sounds cleaner.

But timing matters. National authorities are already managing the complexities of MiCA implementation. Shifting responsibilities to ESMA mid-rollout could slow approvals, complicate compliance, and create approval bottlenecks. In July 2025, ESMA itself raised concerns about Malta’s crypto licensing process, suggesting the authority recognizes how tricky this sector is.

What Happens Next

The proposal remains a draft and requires approval from both the European Parliament and the Council of member states. If passed, it could fundamentally reshape EU financial regulation—though the industry debate suggests the EU may be trading operational efficiency for a whole new set of problems.

The real tension? Balancing centralized control with the messy reality of a fast-moving, high-risk sector that demands local expertise.