Malta’s financial watchdog, the Malta Financial Services Authority (MFSA), has voiced opposition to proposals from France, Italy, and Austria that would give the European Securities and Markets Authority (ESMA) more centralized powers to directly supervise major cryptocurrency firms across the European Union.
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Key Details
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France, Italy, and Austria argue that supervision under the EU’s Markets in Crypto-Assets (MiCA) regulation is being applied inconsistently in different member states. They want ESMA to take over direct oversight of major crypto firms to ensure uniformity.
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Malta, while supporting efforts to align supervision standards (often referred to as “supervisory convergence”) across national regulators, has rejected centralisation. The MFSA argues that giving ESMA direct authority would add extra bureaucracy and possibly reduce efficiency, especially at a time when the EU is trying to boost its competitiveness.
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ESMA’s own peer reviews have flagged some concerns about Malta’s current licensing process under MiCA. For example, ESMA found that in at least one case, Malta granted a CASP (Crypto Asset Service Provider) licence even though there were unresolved issues (governance, risk assessment, etc.) at the time of approval.
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Despite the concerns, Malta states that none of its MiCA licenses are currently at risk of revocation or immediate re-evaluation following the reviews.
Why This Matters
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Regulatory consistency vs. national flexibility: The push reflects tension between EU-wide uniform regulation (to avoid regulatory arbitrage, where firms choose lenient jurisdictions) and the desire of member states to maintain control over their domestic regulatory regimes.
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Investors and crypto companies value certainty. If rules are applied differently in different countries, it creates risk. Companies may prefer jurisdictions with faster or less strict licensing. That can undermine investor protection in weaker jurisdictions.
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MiCA’s passporting model depends on trust between member states’ regulators. The MiCA regulation allows a license granted in one EU country to be used (passported) throughout the EU, but if supervisory standards diverge too much, this system’s credibility is at stake.
What’s Still Unclear
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Exactly how much more power ESMA might be granted (if proposals go forward), and what legal or legislative changes would be needed.
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How ESMA will address unresolved issues in Malta’s licensing process, and whether other member states face similar problems.
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What timelines are being considered for any reforms, and how Malta and possibly other smaller or crypto-friendly jurisdictions might push back.
Implications & What To Watch
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If ESMA centralises crypto oversight, crypto firms operating in the EU might see more uniform compliance requirements, possibly stricter governance, risk, and IT standards across the board.
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Malta may need to further strengthen its licensing / oversight practices to avoid EU criticism and justify its current regulatory model.
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The debate reflects broader EU balancing acts: encouraging innovation and competitiveness in emerging sectors (like crypto), while ensuring investor protection, financial stability, and rule-of-law standards.
