Malta Pushes Back Against EU Proposal to Expand ESMA Oversight of Crypto

Malta has voiced opposition to a joint proposal from France, Italy, and Austria that would hand the European Securities and Markets Authority (ESMA) direct supervisory authority over major cryptocurrency firms operating across the European Union. The initiative, announced on Monday, reflects concern among the three countries that the bloc’s recently adopted Markets in Crypto-Assets (MiCA) regulation may be applied unevenly by national regulators.

If adopted, the plan would shift more regulatory power away from member state authorities and concentrate it in the Paris-based ESMA.

The Malta Financial Services Authority (MFSA) made clear, however, that while it favors stronger cooperation among regulators, it does not endorse centralized oversight. “We believe that centralisation at this stage would only introduce an additional layer of bureaucracy, which could hinder efficiency during a period when the EU is actively striving to enhance its competitiveness,” a spokesperson told Reuters.

France has been particularly forceful in calling for an enlarged role for ESMA, even suggesting it could challenge crypto licenses granted in other jurisdictions. Malta, by contrast, has been careful not to cede national control, even as its own licensing regime has been placed under scrutiny.

Divisions across Europe’s regulatory landscape remain sharp. ESMA chair Verena Ross has said she would welcome broader supervisory authority, but any transfer of powers requires unanimous backing from EU member states—a consensus that appears difficult to reach.

French regulators have warned about potential inconsistencies in the application of MiCA’s licensing provisions and have suggested they could block access to their market for firms registered in other EU countries. The president of France’s financial markets authority, Marie-Anne Barbat-Layani, has pressed for supervision to be handed to ESMA in order to guarantee uniform oversight.

At the center of the debate is MiCA’s “passporting” system, which allows crypto firms authorized in one EU state to operate across all 27. French officials fear this arrangement may create gaps in oversight, enabling companies to exploit weaker regimes while expanding across borders.

The concerns have been amplified by ESMA’s own findings on Malta’s supervisory practices. In July, following a peer review of the MFSA, the European regulator highlighted shortcomings in Malta’s crypto licensing approach. While acknowledging the authority’s staffing and technical expertise, ESMA concluded that the MFSA had only “partially met expectations” in its approval of a crypto asset service provider (CASP), leaving several significant issues unresolved during the licensing stage.

That review, launched in April 2025 by ESMA’s Peer Review Committee, scrutinized the MFSA’s supervisory structures, authorization processes, and monitoring capabilities. ESMA underscored that consistency across member states is vital for MiCA’s credibility, given its aim of harmonizing licensing and supervision of crypto businesses throughout the EU.

Although the findings singled out Malta, ESMA stressed they were intended to guide all National Competent Authorities (NCAs) in refining their procedures for approving CASPs. The agency urged the MFSA to revisit unresolved matters in earlier approvals and tighten its assessment framework in order to meet EU-wide standards.

By fLEXI tEAM