The European Securities and Markets Authority has called for significant expansion of regulatory powers to combat crypto-related financial crimes and market abuse. According to the latest ESMA statement, the regulator wants national regulators to be given powers to remove websites for scams or unauthorized crypto companies, while ESMA itself should have authority to tell crypto companies to freeze crypto assets when there are reasonable grounds to suspect they are linked to crime. As reported by Reuters, ESMA highlighted that 'because of current lengthy procedures, when the freezing of suspicious crypto assets (linked to criminal activities) is requested, it is often too late and the assets have disappeared.' The regulator has also sought powers to deactivate fraudulent websites and freeze crypto funds flagged for violating AML laws, marking a significant expansion of enforcement capabilities.
ESMA has advocated for clearer criteria for determining which activities can be considered genuinely decentralised as crypto markets evolve and DeFi activity grows. The regulator wants firms intermediating DeFi access to have a dedicated framework that governs them and recommends creating a new regulated crypto asset service for firms that provide users with access to DeFi protocols. This aligns with the European Banking Authority's similar calls, as both regulators warn that DeFi platforms are being used to hunt for stablecoin yield, including some unlicensed stablecoins. ESMA also seeks lenient stablecoin bank reserves and a new cyber-based certification framework for DeFi venues to ensure platform resilience to hacks. The proposals are part of the ongoing MiCA review, with feedback expected to be adopted into an updated framework by mid-2027.
The European Securities and Markets Authority has outlined its 2027 MiCA supervision priorities, focusing on operational resilience, outsourcing, liquidity, reverse solicitation, and ensuring crypto firms maintain sufficient EU operations. According to ESMA's 2027 work program published Monday, the regulator will concentrate on coordinating national regulators and developing more consistent supervision of crypto asset service providers across the European Union. Chair Verena Ross described the shift during a European Parliament Committee on Economic and Monetary Affairs meeting, stating that ESMA's MiCA work had moved 'from rulemaking towards supervision and convergence.' The transitional period for trading platform operators to ensure a crypto-asset white paper is drawn up expires on 31 December 2027, marking a critical deadline for regulatory compliance.
ESMA has reinforced the need to harmonize rules for the region's tokenized capital markets as the sector shows explosive growth potential. According to the latest data, tokenized securities are expected to grow 79x to $349 billion in the next four years, with the market currently at $4.4 billion and representing 1% of stablecoin supply. The regulator highlights the need for a framework for tokenised securities and on-chain settlement that can support the development of an integrated European tokenised capital market and facilitate cross-border activity. This growth trajectory mirrors the U.S. SEC's aggressive push for tokenized securities via an "Innovation Exemption," as blockchain technology continues to prove superior to traditional financial rails.
The supervision focus follows the expiry of the final MiCA transition period on July 1, 2025, which left firms that had previously relied on national registrations facing EU-wide authorization requirements. As reported by ESMA, only 281 of 1,343 crypto service providers operating across the European Economic Area had secured MiCA authorization after the deadline, leaving 1,062 without approval. Data showed that 12% of unauthorized firms carried High or Severe risk ratings, compared with 2% of authorized providers. The pool of authorized firms continued to grow, with ESMA's register reaching 300 providers in early July after 57 firms gained authorization, including Standard Chartered and FalconX.
Experience gained from supervising CASPs will feed into the European Commission's scheduled MiCA review, expected by June 2027. The Commission opened a public consultation on the framework's functioning in May, seeking feedback from individuals, crypto service providers, issuers, financial institutions, academics, industry groups and public authorities through August 31. ESMA plans to contribute its supervisory findings to that review and prepare for any legislative proposal that follows. From the 2027 financial year, ESMA will integrate into its revenues the supervisory fees under its newer mandates covering DORA, consolidated tape providers, European Green Bonds and ESG rating providers, fees introduced progressively in 2025 and 2026. Work on crypto-assets, artificial intelligence in financial markets and tokenisation remains part of its longer-term effort to make EU capital markets more integrated, attractive and operationally resilient.
