According to TechFlow TechFlow, on April 12, The Block reported that the European Central Bank (ECB) issued an opinion on April 9, formally supporting the European Commission's plan to centralize the supervision of major financial market participants, including large crypto asset service providers (CASPs), to the European Securities and Markets Authority (ESMA) in Paris.
According to the proposal, regulatory authority over systemically important cross-border institutions will be transferred from the competent authorities of each member state to the ESMA, covering large CASPs, exchanges, central counterparties, and central securities depositories. This is the most significant structural change to the EU's crypto regulatory framework since the Crypto Asset Markets Regulation (MiCA) came into full effect on CASPs at the end of 2024. Under the current MiCA framework, national competent authorities act as front-line regulators, with the ESMA playing only a coordinating role.
In its opinion paper, the European Central Bank (ECB) noted that large crypto companies may be of "systemic importance," and unified regulation would help prevent the risk from spreading to the banking system. The ECB also recommended obtaining non-voting seats on the ESMA Executive Board to provide technical support for payment systems and monetary policy transmission. Furthermore, the ECB warned that ESMA needs to significantly increase its staff and funding to accommodate its expanded regulatory functions and recommended a gradual transition to mitigate operational risks.
Currently, the ECB's opinion is not binding, and the proposal will enter into a negotiation process between EU member states and the European Parliament, which is expected to take several months.
