EU’s ESMA to Review Crypto Custody Risks

The European Union's Markets in Crypto-Assets Regulation, or MiCA, entered into force on June 29, 2023. Its stablecoin rules began applying on June 30, 2024, and the regulation became fully applicable on December 30 that year. Crypto-asset service provider licenses and enforcement are currently handled by the EU's 27 member states. Differences in cross-border standards have prompted France and Italy to advocate direct ESMA supervision of large providers.

The European Central Bank recently backed a reform under consideration by the European Commission that would centralize oversight of large crypto-asset service providers, or CASPs, under the European Securities and Markets Authority. The Malta Financial Services Authority opposed the proposal, arguing that it was too soon to restructure responsibilities only about a year and a half after MiCA became fully applicable on December 30, 2024. It said the EU should first improve existing coordination and consistent enforcement.