ESMA Takes Control: How European Cryptocurrency Regulation Is Changing the Oversight Structure

Since January 2025, the (Markets in Crypto-Assets) regulation officially applies in the European Union, but its return to centralized oversight by ESMA is becoming increasingly evident. Although the regulation was meant to unify the market, reality shows something different: each member state applies the rules in its own way, creating regulatory arbitrage and threatening the coherence of the entire system.

The gap between theory and practice: How MiCA falls apart at national borders

When European harmonization clashes with administrative realities, the outcome is predictable. Germany has already issued over 30 licenses for cryptocurrencies, strongly supporting traditional financial institutions entering the sector. Luxembourg, on the other hand, has approved only three, limiting itself to confirmed mainstream players. This drastic discrepancy is not the result of minor interpretational differences – it is a systemic inconsistency that allows market players to choose a favorable jurisdiction.

Lewin Boehnke, Chief Strategy Officer at Crypto Finance Group, directly commented on the situation: “The application of regulations is very, very uneven." This observation is not new, but it is becoming increasingly problematic as the sector expands.

Why does ESMA want to take control? The answer lies in the details

What seemed to be purely a technical issue turned out to be a political matter of strategic importance. The key moment came when ESMA published a critical report on Malta, stating that the local regulator (MFSA) only partially met licensing requirements. Instead of waiting for further developments, the European commissioner saw an opportunity to strengthen her position.

France, Italy, and Austria have already declared support for a centralized oversight model. The message is clear: harmonizing practices does not mean removing national regulators, but shifting the decision-making burden to the EU level. Boehnke hit the mark again: “From a practical standpoint, uniform application of regulations would be an optimal solution."

The gray area in regulation: The problem with “immediate return”

However, even with the best intentions for centralization, MiCA leaves open questions. One example: the rules require an “immediate” return of assets held by custodians, but no one has defined what “immediate” means in the context of blockchains. Seconds? Minutes? A transaction within a few blocks?

This ambiguity slows adoption, especially among banks, which fear regulatory violations. It will not be resolved by local offices – it requires central interpretation and guidelines. This is another argument in favor of returning control to ESMA.

The future model: A hybrid oversight system inspired by the ECB

The future of European cryptocurrency oversight may follow the European Central Bank’s example. The ECB directly supervises the largest banks, working with national regulators within a centralized network. This model – a mix of central leadership with local support – could be applied to cryptocurrency regulation.

In practice, this means that national regulators would become supporting experts for the central authority, not the ultimate decision-makers. It’s a change in role, but not elimination. Such a solution could create a standard competitive with the US SEC and prepare Europe for the challenges of the Web3 era.

Europe seeks regulatory independence: Solana, Avalanche, and the future

With the expansion of blockchain ecosystems – from Solana to Avalanche and Cosmos – clear and credible regulatory frameworks are becoming an absolute necessity. Europe no longer wants to be a passive follower – it aims to establish its own standard, which would simultaneously protect investors and serve as a foundation for market credibility.

ESMA, taking on more and more powers, positions itself as an authority capable of this role. This is not a conflict of competencies, but a natural evolution of oversight structure in response to market needs.

Key indicators tracking the change

• MiCA 2025: Full implementation except for stablecoins (delayed to 2026)
• License discrepancies: 30 issued in Germany, 3 in Luxembourg
• Critical report: ESMA published comments on Malta in November 2025
• Supporting coalition: France, Italy, Austria for strengthening ESMA’s role
• Main issue: Lack of uniform interpretation of “immediate return” in MiCA

The European vision seems clear: instead of a dispersed system with regulatory gaps, Europe will have centralized oversight capable of competing on the global stage. ESMA is not only returning to the center – it is building a stronger position for the EU’s stance on cryptocurrencies.