ECB Backs Plan to Move Crypto Oversight to EU Markets Regulator

The European Central Bank has issued a formal opinion supporting the transfer of oversight of large crypto firms and cross-border trading platforms to the European Securities and Markets Authority (ESMA). The central bank argued that centralized supervision is necessary to prevent financial shocks from migrating into the traditional banking system as the two sectors become increasingly linked.

The proposal would move authorisation, monitoring, and enforcement powers for all crypto-asset service providers (CASPs) from national bodies to ESMA. This would ensure supervisory convergence, reduce fragmentation, and mitigate cross-border risks in crypto-asset markets, supporting financial stability and the integrity of the single market.

The ECB warned that banks offering crypto services or partnering with digital asset firms could allow volatility to transmit shocks into the financial system. The central bank highlighted the need for a centralized Union supervisory regime for CASPs capable of addressing systemic risks posed by significant activities, preventing risk migration into the banking system, and safeguarding financial stability.