The EU is preparing a major reform of Crypto regulation

Less than two years after the entry into force of Mica, the ambition of a unified European framework for cryptos vacillates. Between national divergences, institutional criticism and tensions on passporting, the European Union struggles to offer the promised coherence. And now, Esma pleads to regain control, at the risk of rekindling tensions between Brussels and national regulators.

National supervision out of breath

In an interview with Financial TimesVerena Ross, president of the European Financial Markets Authority (ESMA), alerts to the limits of the current model of supervision of cryptos in the European Union, while she was already warning against token actions in September.

She deplores a ” persistent market fragmentation“, Caused by the delegation of regulatory missions to the national authorities. “”Each authority must build its own expertise and its own surveillance system, which leads to ineffective“, underlines-Is she.

For ESMA, this decentralized approach slows down the emergence of an integrated market and harms Europe's competitiveness on the international scene.

Concretely, the MICA regulation, which entered into force in June 2024, provides that each Member State remains responsible for granting licenses to Crypto service providers. This led to a very unequal distribution of the first authorizations.

Some jurisdictions, especially the smallest and agile, have taken ahead:

• Lithuania issued the first Mica license to Robinhood Europe;
• Malta authorized large platforms like OKX and Crypto.com;
• Luxembourg has validated the recording of Coinbase and Bitstamp.

However, this national dynamic is problematic. Last July, ESMA criticized the Maltese authorization process, revealing insufficiently robust control standards. These differences from one country to another compromise the initial objective of Mica: establish a unified and reliable framework for all 27 member states.

A single market cracked by tensions on cross -border access

Beyond institutional criticism, the implementation of“Passporting”cornerstone of the Mica regulation, causes increasing friction between Member States.

This mechanism allows a company licensed in a member country to offer its services throughout the Union without having to obtain additional approval. A principle which, on paper, facilitates the unification of the market, but which, in practice, revives national rivalries.

Jerome Castille, compliance manager at Coinshares, says that Mica's biggest challenge now lies in “the uniformity of its application through the 27 Member States».

Countries like France now plan to restrict access to their market for certain approved companies elsewhere in the Union. This posture, although the draft state, would call into question one of the foundations of the European single market.

Marina Markezic, Executive Director of the European Crypto Initiative, recalls that “27 competent national authorities oversee the same regulation“, Which, according to her, goes against the ambition of a truly harmonized framework.

This climate of regulatory uncertainty could have deterrent effects for international players, but also slow down investment and innovation dynamics within the European market. In this context, the proposal to centralize supervision with ESMA could establish itself as a lever for efficiency, but also as a condition of survival of the Mica project, while France plans to block certain Crypto companies.