EU finance ministers have agreed on a proposed overhaul of crypto supervision that would place the bloc’s largest crypto-asset service providers under the direct oversight of the European Securities and Markets Authority, or ESMA.
The agreement, reached by the Council of the European Union on October 9, is part of a broader effort to integrate Europe’s financial markets. It seeks to close a gap in the Markets in Crypto-Assets Regulation, known as MiCA, which currently allows a crypto firm licensed in one EU member state to offer approved services across all 27 countries while remaining mainly supervised by its home regulator.
According to CryptoSlate, the compromise is narrower than the European Commission’s initial proposal, which would have transferred all crypto service providers to ESMA. Under the Council’s position, only about 10 to 15 companies out of roughly 360 providers are expected to qualify for centralized supervision.
The agreement does not change EU law immediately. It establishes the Council’s negotiating position, and the proposal must still be discussed with the European Parliament before any final rules are adopted.
Why MiCA’s passporting model is under scrutiny
MiCA’s passporting system was intended to make it easier for authorized crypto companies to operate across the European Union. Once a provider receives approval in one member state, it can offer permitted services in other EU countries without creating a separate physical presence in every market.
For firms, the system avoids repeated authorization procedures. It also means, however, that the regulator in the country where a company first receives its license carries much of the responsibility for assessing and supervising a business whose customers, assets and technology infrastructure may extend throughout the bloc.
The limits of that arrangement became a focus of attention after an ESMA review in July 2025 of the Malta Financial Services Authority’s authorization of an unnamed crypto provider. ESMA said there was insufficient evidence that the licensing process had adequately addressed several matters, including governance, conflicts of interest, technology systems, custody arrangements and some anti-money-laundering risks.
The review did not conclude that all Maltese licenses were deficient. ESMA also recognized the Maltese regulator’s industry knowledge and supervisory resources, while recommending improvements to its authorization procedures.
Malta later said it was implementing the recommendations. In September 2025, however, the authority opposed moving supervision to ESMA, arguing that MiCA was still too new to require another regulatory layer. It also warned that centralization could increase bureaucracy and weaken competitiveness.
The disagreement illustrated the wider regulatory issue: a licensing decision by one national authority can affect customers throughout Europe, even when regulators in other countries might apply different expectations or levels of scrutiny.
Proposed thresholds would target the biggest platforms
The Council’s draft would give ESMA direct responsibility for providers with at least 15 million active users in the EU. Companies could also fall under centralized oversight if they meet three of five additional significance tests covering their users, assets held in custody, transaction activity and links to the wider financial system.
The criteria include:
- More than 1 million active users.
- More than €1 billion in crypto assets under custody.
- More than €4 billion in annual client transactions.
The proposed approach would therefore focus on the size and financial importance of a provider, rather than simply the country where it is incorporated or licensed. Most of the market would continue to be supervised by national authorities.
ESMA would receive powers to request information, carry out inspections, investigate possible breaches and impose financial penalties. The proposed framework would also allow the authority to restrict services or withdraw authorization when firms fail to meet regulatory requirements.
For providers that remain under national supervision, ESMA would still have a broader coordination role through guidelines, peer reviews, joint investigations and certain intervention powers intended to address differences in enforcement between member states.
The plan also calls for a full-time ESMA executive board consisting of a chair and five independent members. That body would handle operational and company-specific decisions, while national regulators would continue to take part in wider policy and supervisory coordination.
Two-year transition proposed as negotiations continue
The Council expects a two-year transition period during which joint teams would transfer information, operational responsibilities and expertise to ESMA. Existing MiCA licenses held by companies that move to direct European supervision would remain valid, meaning those firms would not automatically have to apply for new authorizations.
The final impact will depend on the thresholds agreed with Parliament, the resources made available to ESMA and the treatment of companies close to the qualifying limits. The Council must formally adopt its negotiating position, and talks can begin once the European Parliament has established its own position.
Those negotiations will determine how many firms ultimately move from national to EU-level oversight and when the transfer begins. For now, the proposal combines centralized scrutiny for a small group of major providers with continued national supervision for most of the sector.
Current crypto market picture
Moneyiar market data at 10:09 on October 13, 2026, showed mixed performance among the tracked assets:
- Cronos (CRO): $0.0594618822, down 3.41% over 24 hours and 12.5% over seven days.
- Ethereum Name Service (ENS): $5.9820625884, down 4.93% over 24 hours and 12.91% over seven days.
- Vision (VSN): $0.0431844157, down 1.51% over 24 hours and 2.05% over seven days.
- Decimal (DEL): $0.4136084572, up 1.31% over 24 hours and 7.76% over seven days.
