The European Central Bank officially supports transferring the primary regulatory authority over major crypto companies to ESMA

Breaking News from TechFlow, April 12th, according to The Block, the European Central Bank (ECB) released a position paper on April 9th, officially supporting the European Commission’s plan to transfer regulatory authority over major financial market participants (including large crypto asset service providers, CASPs) to the European Securities and Markets Authority (ESMA) based in Paris.

Under this proposal, the regulatory authority over systemically important cross-border institutions will be transferred from national competent authorities to ESMA, covering large CASPs, trading venues, central counterparties, and central securities depositories. This is the most significant structural adjustment to the EU’s crypto regulatory framework since the full implementation of the Markets in Crypto-Assets Regulation (MiCA) at the end of 2024.

Under the current MiCA framework, national authorities serve as primary regulators, with ESMA playing only a coordinating role.

The ECB’s position paper states that large crypto enterprises may have “systemic importance,” and unified regulation can help prevent risks from spreading to the banking system. Additionally, the ECB recommends that ESMA’s Executive Committee be granted a non-voting seat to provide technical support for payment systems and monetary policy transmission. The ECB also warns that ESMA will need to significantly increase staffing and funding to handle the expanded regulatory responsibilities and suggests a phased transfer process to reduce operational risks.

Currently, the ECB’s position paper is non-binding, and the proposal will enter negotiations between EU member states and the European Parliament, expected to take several months.