Debate Grows as EU Considers Giving ESMA Direct Oversight of Crypto and Stock Markets

On Nov 4, 2025

The European Commission is considering expanding the powers
of the European Securities and Markets Authority to oversee cryptocurrency and
traditional capital markets. The plan could give ESMA direct supervision over
exchanges and crypto service providers, creating a system similar to the US
SEC. A draft is expected in December.

Digital
assets meet tradfi in London at the fmls25

The expanded role of ESMA
builds on guidelines issued in April 2025 for national regulators on
detecting and preventing market abuse under MiCA. The rules emphasized
risk-based supervision and cross-border coordination, providing a framework for
more consistent oversight across EU member states.

MiCA Passport System Faces Potential Risks

Currently, under the Markets in Crypto-Assets Regulation,
companies licensed in one EU country can operate across all 27 member states
through a “passport” system. Some experts warn that shifting decision-making
entirely to ESMA could slow innovation in crypto and fintech.

Faustine Fleuret of decentralized lending protocol Morpho
said centralizing oversight “would demand vast human and financial resources”
and suggested giving ESMA stronger oversight over national regulators instead.

🇪🇺 NEW: The European Commission is drafting a proposal to give ESMA SEC-like oversight over crypto and stock exchanges, with draft expected in December.Could this make the EU more crypto-friendly or stifle innovation? pic.twitter.com/JiYNBz3pXv
— Cointelegraph (@Cointelegraph) November 2, 2025

France Challenges EU Crypto Passport Rules

Concerns over enforcement gaps have surfaced. In September,
France’s regulator signaled it might block the passporting of crypto licenses,
raising doubts about uniform application across the EU.

Fleuret said the passport system is “the cornerstone of EU
financial regulations” and key to maintaining Europe’s competitive advantage
for crypto firms.

Lagarde Backs Single EU Supervisory Body

Other analysts view a larger role for ESMA as a potential
step toward regulatory consistency. Dea Markova from digital asset custody
platform Fireblocks said centralized supervision could help address licensing,
cybersecurity, and operational risks, but its effectiveness depends on proper
implementation and resourcing.

European Central Bank President Christine Lagarde has also
expressed support for a single EU supervisory body, echoing proposals similar
to the SEC model.

This article was written by Tareq Sikder at www.financemagnates.com.
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