ECB backs plan to shift crypto supervision to EU ESMA watchdog

The European Central Bank (ECB) has formally backed a European Commission proposal to transfer supervisory responsibility for systemically important, cross-border crypto-asset service providers and market infrastructures to the European Securities and Markets Authority (ESMA). The ECB published its opinion in early April, signalling strong institutional support for centralising oversight at EU level.

According to the ECB’s opinion and accompanying reports, the move would allow ESMA to directly supervise large crypto trading venues, central counterparties (CCPs), central securities depositories (CSDs) and certain crypto-asset service providers (CASPs), with the aim of ensuring consistent application of the Markets in Crypto-Assets framework. Proponents argue this would close gaps created by differing national approaches and reduce regulatory arbitrage.

The proposal has met political resistance from several member states that prefer to retain national oversight or favour a narrower scope limited to the most significant entities. The Commission first signalled its intent to strengthen ESMA’s role late last year, arguing that the cross-border nature and potential systemic risks of large crypto firms justify EU-level supervision. These tensions reflect broader debates over the balance between national competence and EU-level integration.

Market participants are watching how the plan could alter compliance costs and operational models for major providers. ECB commentary frames the change as part of a wider push for deeper capital markets integration and more coherent supervision of large market players; supporters contend that consistent EU oversight would improve market resilience, while critics warn of politicised rule-making and implementation delays. Immediate market price moves have been mixed as the proposal advances through political channels.

Analysts say the roadmap ahead requires legislative approval by the European Parliament and Council and likely detailed secondary rules defining which entities will be classified as systemically important. Some expect ESMA to retain the ability to delegate tasks to national authorities, creating a hybrid model; others predict a gradual transfer of powers focused first on the most interconnected platforms. The ultimate outcome will hinge on negotiations among member states and on the technical criteria set out in follow-up measures.