The European Commission has unveiled a plan to establish unified supervision over stock exchanges, cryptocurrency companies, and clearing houses operating within the EU. This could be the first step toward creating a single European capital market, a goal outlined by Mario Draghi in his influential Draghi report. It may also mark the beginning of the end for national regulators overseeing crypto asset markets within the EU.

ESMA seeks efficiency and unified oversight

Verena Ross, chair of the European Securities and Markets Authority (ESMA), told the Financial Times that under the Commission’s draft proposal, the regulation of several sectors of EU financial markets could be transferred from national authorities to ESMA.

According to Ross, such a change would drive Europe toward “a more integrated and globally competitive capital market.” The initiative aims to address market fragmentation and strengthen the EU’s position as a unified financial bloc.

Initially, the EU planned to make ESMA the main supervisor of crypto asset service providers under its landmark Markets in Crypto-Assets (MiCA) regulation, which came into force at the end of 2024. However, concerns about ESMA’s capacity to manage such oversight led to national authorities retaining control over the rapidly growing crypto market.

Ross argues that this fragmented model has created inefficiencies. “While we are doing a lot of work to align the implementation of MiCA, it clearly requires significant effort from both ESMA and national supervisors,” she said. Developing expertise across 27 national bodies, she added, “could have been done much more efficiently once at a European level.”

Following Draghi’s recommendations, the Paris-based authority has already gained new powers. Starting next year, ESMA will oversee providers of consolidated tapes — databases of real-time data on equity and bond prices — as well as agencies delivering ESG (environmental, social, and governance) ratings.

EU Commissioner for Financial Services Maria Luís Albuquerque confirmed last month that the Commission is “considering a proposal to transfer supervisory powers to ESMA for the most significant cross-border entities,” including stock exchanges, crypto companies, and central counterparties.

Smaller EU states fear loss of control

However, smaller EU states are resisting the move. Claude Marx, head of Luxembourg’s financial regulator, warned that making ESMA the central authority for all EU investment funds would create a “monster.” Similarly, Malta has voiced strong opposition to expanding ESMA’s powers.

Established in 2011, ESMA was designed to harmonize financial rules across the bloc. In his report, Mario Draghi suggested transforming ESMA into an institution similar to the US Securities and Exchange Commission (SEC) — a key pillar in Europe’s efforts to close its productivity and innovation gap with the United States.

Sources:

https://www.ft.com/content/36bd279c-215e-4582-90ff-7efd6bfa54ea

https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en

https://europa.eu/newsroom/ecpc-failover/pdf/speech-25-2134_en.pdf