Key Takeaways
A European Commission proposal to grant the Paris-based European Securities and Markets Authority (ESMA) direct supervisory power over the bloc’s largest crypto firms is facing opposition from Malta, setting up a key battle over the future of EU regulation. The plan is backed by at least three member states: France, Austria, and Italy.
Malta’s Financial Services Authority (MFSA) believes it is “premature to introduce structural changes” like centralized supervision, a spokesperson told Cointelegraph. They argued that the Markets in Crypto Assets Regulation (MiCA) has only recently become fully applicable and its “impact on the market and market players is still being assessed.”
The push for centralization follows a joint September 2025 paper from the market authorities of France, Austria, and Italy calling for a “stronger European framework.” They argue that centralized oversight is necessary to curb regulatory shopping and address “major differences” in how national regulators authorize firms. The debate was amplified by an ESMA peer review of a Maltese CASP authorization, reported to be OKX, which found the process “should have been more thorough.”
At stake is the core balance of MiCA, which allows crypto-asset service providers (CASPs) to win authorization in one member state and passport those services across all 27 EU nations. The outcome of this dispute will determine whether regulatory power consolidates at the EU level or remains with national authorities, a decision with significant implications for Europe’s competitiveness in the digital asset market.
Supporters of the move argue that a single supervisor for major cross-border crypto companies would lead to “more efficient and harmonized supervision,” an ESMA spokesperson told Cointelegraph. This would strengthen investor protection and reduce the risk of "forum shopping," where firms seek out jurisdictions with the most favorable rules. The joint paper from France, Austria, and Italy echoed these concerns, warning that divergent national practices could undermine the integrity of Europe’s digital asset market.
The ESMA already coordinates peer reviews of national authorities, including the fast-track review of the Maltese CASP. While the review concluded that Malta met expectations on its supervisory setup, the finding that the specific authorization could have been more rigorous is being used as evidence for why centralization is needed.
Malta contends its position is not about protecting its national advantage but about “regulatory timing and effectiveness.” Ian Gauci of Maltese law firm GTG, an architect of Malta’s original crypto framework, argued the debate should be about the structure of supervision itself. He suggested that rather than a blanket centralization, power should be targeted at genuinely systemic cross-border firms with clearly identified risks.
OKX, the exchange widely reported to be the subject of the ESMA review, rejects the notion that it chose Malta to capture a regulator. Erald Ghoos, the firm's European CEO, stated its MiCA authorization was the result of a multi-year relationship under a high-standard regime since 2021, “not an expedited process.”
Gauci’s primary concern is structural fragmentation. He warned that splitting oversight of a single large firm across ESMA for market conduct, national authorities for local issues, the new Anti-Money Laundering Authority (AMLA), and separate IT risk under the Digital Operational Resilience Act (DORA) could leave accountability shattered in a crisis. "Once you split supervision like this, that unity disappears," he said.
This article is for informational purposes only and does not constitute investment advice.
