Malta Rejects EU Move to Place Crypto Oversight Under ESMA

Malta is resisting a joint proposal from France, Italy, and Austria to grant the European Securities and Markets Authority (ESMA) direct supervisory powers over major crypto firms across the EU. The three nations advocate for ESMA to centralize oversight, citing concerns over inconsistent application of the new Markets in Crypto-Assets (MiCA) regulation by national authorities.

However, Malta’s Financial Services Authority (MFSA) argues that centralizing supervision would create unnecessary bureaucracy and hinder the EU’s competitiveness, preferring stronger coordination among national regulators instead of replacing them.

France, a key proponent of ESMA’s expanded role, has even suggested challenging crypto licenses issued by other member states, particularly due to concerns about MiCA’s “passporting” model potentially allowing firms to exploit weaker oversight in certain jurisdictions.

ESMA itself recently conducted a peer review of Malta’s licensing practices, finding that the MFSA “partially met expectations” in authorizing a crypto asset service provider and left several key issues unresolved. ESMA stressed the importance of uniform standards for MiCA’s success and urged the MFSA to strengthen its review framework.

While ESMA’s chair supports expanded powers, shifting supervisory authority away from member states requires significant political consensus, which currently seems unlikely. The debate highlights a division among European regulators, with some pushing for centralized oversight to close regulatory gaps and others, like Malta, prioritizing national control to foster innovation and efficiency.

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