The European Commission plans to present proposals in December to expand central supervision over key financial market infrastructures — including stock exchanges, crypto exchanges, and clearing houses. The goal is to eliminate fragmentation in one of the single market’s core areas. However, there are also concerns that the plan could push crypto innovation overseas.

Stronger role for ESMA across European markets

The European Securities and Markets Authority (ESMA), the EU’s financial market watchdog, is set to gain new competences related to the bloc’s financial market infrastructure. According to the Financial Times, the European Commission is preparing plans to expand central supervision in this area.

If adopted, ESMA would be empowered to oversee European stock exchanges, crypto exchanges, and clearing houses. The move is part of a broader effort to strengthen the EU’s competitiveness against the US by enabling companies to access funding and scale within Europe rather than across the Atlantic.

Currently, the EU’s financial markets are fragmented, with dozens of national and regional regulators and hundreds of trading and post-trading institutions. This complexity raises the cost of cross-border trading, which often prevents startups from scaling effectively across Europe.

The proposed model follows the example of the US Securities and Exchange Commission (SEC) and is viewed as a crucial step toward completing the EU’s Capital Markets Union.

The initiative has the backing of ECB President Christine Lagarde and her predecessor Mario Draghi, who have both cited the lack of unified supervision as a key factor undermining Europe’s economic competitiveness.

The European Commission intends to present the proposal as part of its “markets integration package” in December. According to the Financial Times, ESMA would have final authority over disputes between large asset managers and could issue binding decisions in conflicts between national supervisory authorities.

This move is likely to be supported by France, Italy, and Austria, which have all recently called for stronger central supervision. Germany may also join, as Chancellor Friedrich Merz has expressed openness to the idea.

Risks of overlapping regulation and industry pushback

However, some experts warn of potential complications stemming from overlapping regulatory frameworks — particularly between the Markets in Crypto-Assets (MiCA) regulation and the Payment Services Directive (PSD2). Starting in March 2026, stablecoin issuers will be required to hold both a MiCA license and a payment services license for the same functions, such as managing and transferring euro-pegged stablecoins.

Industry experts warn that such duplication could lead to significant compliance burdens. For example, firms would need to meet combined capital requirements of €250,000–€125,000 under MiCA, plus an additional €125,000 under PSD2, as well as face higher operational costs from managing two parallel frameworks. Patrick Hansen, Head of EU Policy at Circle, called this a “regulatory own goal,” arguing it contradicts MiCA’s goal of harmonized oversight.

The EU’s ongoing regulatory efforts highlight a key challenge — balancing innovation with investor protection. Supporters say centralized oversight could strengthen trust and stability, while critics warn that excessive complexity might drive companies toward more flexible markets, particularly in the United States.

Sources:

https://www.ft.com/content/0727d3da-d901-4074-bcde-8be675a0931f

https://www.bitget.com/news/detail/12560605043265

https://www.cryptopolitan.com/eu-puts-crypto-exchanges-under-esma/