EU's Big Move on Crypto: Innovation at Risk?
The European Union is making waves with a plan to give the European Securities and Markets Authority (ESMA) more power over cryptocurrency and stock markets. This move aims to create a unified regulatory system, much like the one in the U.S. But not everyone is on board.
Key Points
- Unified Regulation: The EU is considering allowing ESMA to directly oversee stock exchanges and crypto service providers.
- One-Size-Fits-All Approach: The plan could lead to standardized regulation across the EU.
- Expected Unveiling: The proposal is set to be revealed in December.
Current Landscape
Under the Markets in Crypto-Assets Regulation (MiCA), crypto companies licensed in one EU country can operate across all 27 member states. This is a significant development for the industry.
Concerns and Criticisms
Some worry that centralizing control in ESMA could stifle innovation, particularly for crypto and fintech startups.
Faustine Fleuret, who works at Morpho, a decentralized lending protocol, believes that centralizing all decision-making in Brussels might not be ideal.
Fleuret suggests an alternative approach: empowering ESMA to oversee national regulators rather than taking all control away from them. She also emphasizes the importance of the EU passporting system, which allows companies to operate across the bloc.
In September, France's securities regulator hinted at banning the passporting of crypto licenses, raising concerns about potential gaps in the EU's regulatory framework.
Support for Centralization
Some experts see ESMA's expanding role as a positive step.
Dea Markova, from Fireblocks, thinks centralizing control could help address issues like licensing, cybersecurity, and custodial risks.
However, she warns that the success of this plan depends on its implementation and funding.
Even the European Central Bank's President, Christine Lagarde, has shown support for the idea of a single supervisory body, similar to the SEC in the U.S.
