Malta’s Reservations on ESMA’s Oversight Initiative
Malta has expressed strong reservations regarding a joint initiative from France, Italy, and Austria aimed at empowering the European Securities and Markets Authority (ESMA) with direct oversight over significant cryptocurrency firms within the European Union. This proposal emerged earlier this week when the trio of nations voiced their worries about the potential inconsistencies in how member states are interpreting the new Markets in Crypto-Assets (MiCA) regulations.
Malta’s Stance on Centralized Oversight
If accepted, this initiative would transfer significant regulatory authority from national bodies to ESMA, which is headquartered in Paris. However, Malta’s Financial Services Authority (MFSA) has articulated its stance in favor of enhanced collaboration among national regulators while firmly opposing the idea of centralized oversight. A spokesperson for the MFSA noted to Reuters that promoting centralization at this juncture could create additional bureaucratic hurdles that might impede efficiency, especially as the EU seeks to bolster its global competitive edge.
Division Among European Financial Regulators
France has notably championed this increased role for ESMA, even suggesting that it might contest crypto licenses granted by other EU member states. In contrast, Malta is exhibiting caution regarding the relinquishment of regulatory control, particularly in light of recent scrutiny faced by the MFSA concerning its licensing practices in connection to MiCA.
The division among European financial regulators is evident, as ESMA’s chair, Verena Ross, has shown openness to the prospect of enhanced powers. Nevertheless, any transfer of supervisory authority necessitates a consensus among member states, a challenging hurdle that remains unbridged. France’s concerns about disparate applications of crypto licensing across the continent are particularly pressing, with warnings issued that firms holding licenses from other nations could be barred from operating within French borders. The head of France’s Autorité des Marchés Financiers (AMF), Marie-Anne Barbat-Layani, has advocated for governance to shift to ESMA to ensure uniform regulatory oversight.
Concerns Over MiCA Regulation’s Passporting System
The crux of the concern lies in the MiCA regulation’s “passporting” system, which permits licensed crypto firms in one EU country to conduct operations throughout all 27 member states. French regulators worry this could result in regulatory loopholes, with companies potentially taking advantage of less stringent oversight in certain areas as they expand.
ESMA’s Review of Malta’s Crypto Licensing
In July, ESMA highlighted deficiencies in Malta’s approach to crypto licensing during a peer review of the MFSA. The review, conducted by ESMA’s Peer Review Committee and initiated in April 2025, found that while the MFSA has sufficient staffing and industry expertise, it only partially met the expected standards regarding the authorization of crypto asset service providers (CASPs). Important issues concerning its approval processes were found to be inadequately addressed.
Despite focusing on Malta specifically, ESMA emphasized that its findings are intended to assist all National Competent Authorities (NCAs) in improving their CASP authorization procedures. The regulator called upon the MFSA to reevaluate any outstanding concerns from prior approvals and to enhance its review methodology to align with EU standards. This ongoing debate reflects the broader challenges facing the EU as it seeks a harmonized approach to cryptocurrency regulation.
