EU Council Backs ESMA Negotiating Position on Crypto Oversight

EU finance ministers agreed Oct. 9 on a negotiating position that would give the European Securities and Markets Authority (ESMA) direct oversight of the European Union’s most significant cross-border crypto-asset service providers, tightening supervision of firms operating across national markets.

The proposal is part of the Market Integration and Supervision Package, the centerpiece of the EU’s Savings and Investments Union. The package is designed to reduce regulatory fragmentation, compliance costs and barriers to cross-border capital flows.

The Council’s position would create a two-tier supervisory model for crypto-asset service providers. The most significant cross-border providers would come under direct EU-level supervision, while other providers would remain under national authorities. The European Commission’s original proposal called for ESMA oversight of all crypto-asset service providers.

ESMA would also directly supervise the most significant cross-border trading venues, central securities depositories and central counterparties that are currently overseen by national authorities.

The transition to the new structure would last two years. During that period, joint teams made up of ESMA and national experts would support supervision before permanent cooperation arrangements are established. ESMA would retain responsibility for final supervisory assessments and decisions.

The package also calls for a new full-time ESMA executive board and stronger tools to promote consistent application of EU law. It contains three legislative proposals covering capital-market integration, financial-market and asset-management rules, and settlement finality.

“Europe has the savings. Now it’s time to put them to work,” Simon Harris, Tánaiste and Minister for Finance of Ireland, said. Harris called the agreement a major step toward deepening the Savings and Investments Union and strengthening the EU’s longer-term competitiveness.

The Council’s agreement does not put new rules into force. The Council presidency can open negotiations with the European Parliament after Parliament adopts its own position.