Economy

Can EU Crypto Oversight Get Streamlined? Malta’s Resistance and the Battle for Control

Malta opposes EU plan for ESMA to directly oversee crypto firms, unlike France, Italy, and Austria.

September 16, 2025, 12:59 PM

Three different cryptocurrency coins, Bitcoin, Ethereum, and Litecoin, on top of Euro banknotes

A visual representation of the intersection between cryptocurrencies and traditional fiat currency, with three distinct crypto coins placed on Euro banknotes. By MDL.

Executive Summary

Malta’s financial watchdog opposes a push by France, Italy, and Austria to grant the European Securities and Markets Authority (ESMA) direct supervisory powers over major crypto companies.

Proponents of centralization argue it would ensure consistent application of EU crypto rules and prevent regulatory arbitrage, while Malta believes it would introduce unnecessary bureaucracy and prefers harmonized national supervision.

The debate highlights a significant division within the EU regarding crypto oversight, with ESMA open to expanded powers and France’s regulator willing to challenge licenses granted by other member states.

The Story So Far

The European Union has recently introduced new crypto asset regulations, but member states are divided on the optimal approach to their supervision. This divergence stems from concerns by some, like France, Italy, and Austria, that national regulators are applying the rules inconsistently, potentially creating an uneven playing field. Conversely, countries like Malta argue that centralizing direct supervision under ESMA would introduce unnecessary bureaucracy and hinder efficiency, preferring an approach that harmonizes national oversight.

Why This Matters

The ongoing divergence within the EU regarding centralized crypto supervision under ESMA, stemming from concerns over inconsistent national application of new regulations, threatens to create an uneven playing field for crypto firms across the bloc and underscores the significant challenge of harmonizing financial oversight while balancing national autonomy with the need for consistent rules. This could lead to regulatory arbitrage and potential inter-state friction over licensed entities, ultimately shaping the future efficiency and trust in the EU’s single market for digital assets.

Who Thinks What?

France, Italy, and Austria advocate for the European Securities and Markets Authority (ESMA) to directly supervise significant crypto firms across the EU, citing concerns about inconsistent application of rules by national regulators and potential regulatory arbitrage.

The Malta Financial Services Authority (MFSA) opposes direct central supervision by ESMA, arguing it would introduce unnecessary bureaucracy and hinder efficiency, preferring an approach that harmonizes national supervision instead.

ESMA, through its head Verena Ross, has expressed openness to the idea of expanded supervisory powers over crypto companies, indicating a willingness to take on a more prominent regulatory role.

Malta’s financial watchdog is opposing a push by several member states, including France, Italy, and Austria, to grant the European Securities and Markets Authority (ESMA) greater direct supervisory powers over major crypto companies. This divergence highlights a key debate within the European Union regarding the implementation and oversight of its new crypto asset regulations.

EU Regulators Divided on Crypto Oversight

France, Italy, and Austria have advocated for the Paris-based ESMA to assume direct supervision of significant crypto firms across the bloc. Their collective call stems from concerns that individual national regulators are applying the EU’s recently introduced crypto rules inconsistently.

This perceived lack of uniformity could create an uneven playing field or regulatory arbitrage opportunities within the single market. Proponents argue that centralized oversight would ensure a more consistent and robust application of the rules.

Malta’s Stance Against Centralization

The Malta Financial Services Authority (MFSA), however, has expressed reservations about this centralization proposal. While supporting ESMA’s efforts to foster supervisory convergence among national authorities, the MFSA believes that direct central supervision would introduce unnecessary bureaucracy.

The Maltese authority argues such a move could ultimately hinder the efficiency of regulatory processes. It prefers an approach that harmonizes national supervision rather than centralizing it entirely.

Potential Challenges and ESMA’s View

Adding to the tension, France’s regulator has indicated to Reuters that it would not rule out challenging crypto licenses granted by other EU member states. This suggests a willingness to scrutinize the regulatory decisions made by other national authorities.

ESMA head Verena Ross has reportedly expressed openness to the idea of expanded powers, suggesting a willingness from the EU’s top securities regulator to take on a more prominent role. However, the initiative faces significant resistance from various other EU members, reflecting a broader division on the issue of national versus centralized oversight.

Outlook on EU Crypto Regulation

This ongoing debate underscores the complex challenge of harmonizing financial supervision within the EU’s single market, particularly in rapidly evolving sectors like crypto assets. The outcome will significantly shape the future regulatory landscape for digital assets across the European Union, balancing the desire for consistent oversight with concerns over national autonomy and regulatory efficiency.