MiCA 2.0: An Analysis of Franco-Austrian-Italian Proposals to Fortify the European Crypto-Asset Framework
- James Ross
- Sep 21
- 19 min read
Executive Summary
The EU’s MiCA Regulation, effective from December 30 2024, marks a milestone in creating a unified legal framework for digital assets. Designed to promote innovation, stability, and investor protection in the single market, a joint paper from September 15, 2025, by authorities from France, Austria, and Italy, warns that early implementation reveals structural flaws risking its core goals.
Authorities, however, warn that differing supervisory practices lead to a fragmented regulatory landscape prone to “regulatory arbitrage,” where firms seek approval in lighter jurisdictions before operating across the EU. This hampers a level playing field, weakens European firms’ competitiveness, and exposes investors to risks. A major vulnerability is that non-EU platforms can access European clients via intermediaries, thereby bypassing MiCA’s safeguards.
In response to these early but significant challenges, and with a view to aligning the EU framework more closely with evolving global standards from the Financial Stability Board (FSB) and the International Organisation of Securities Commissions (IOSCO), the AMF, FMA, and CONSOB have put forward a robust package of four targeted reforms. These proposals collectively signal a clear trajectory towards greater supervisory centralisation and a hardening of the EU’s regulatory perimeter.
The four key proposals are:
Direct ESMA Supervision of Significant CASPs: A call for a genuine transfer of supervisory powers to the European Securities and Markets Authority (ESMA) for the authorisation and ongoing oversight of major Crypto-Asset Service Providers (CASPs). This is intended to eliminate supervisory competition and ensure uniform application of the rules for systemically essential players.
Stricter Rules for Third-Country Platforms: A mandate requiring any EU intermediary to execute client orders only on trading platforms that are either fully MiCA-compliant or subject to a formally recognised “equivalent” third-country regime. This measure aims to close a critical loophole that erodes investor protection.
Mandatory Independent Cyber-Security Audits: The introduction of a compulsory, independent cyber-security audit as a prerequisite for obtaining a MiCA authorisation, with periodic renewals thereafter. This elevates operational resilience to a core pillar of prudential oversight.
A “One-Stop Shop” for Token Offerings: The centralisation of the filing, scrutiny, and management of pan-European token offerings (excluding stablecoins) under ESMA. This would streamline the process for issuers and ensure consistent standards, fostering an accurate single market for crypto-asset primary issuance.
This report offers an analysis of the deficiencies identified by the authorities and a detailed examination of each of the four reform proposals. It evaluates their structural foundations, operational effects, and broader strategic implications for the future of the European crypto-asset market. The analysis concludes that these proposals, if implemented, would represent a “MiCA 1.5”—a proactive and substantial evolution of the framework, aimed at securing the EU’s position as a leading global hub for regulated and resilient digital finance.
I. The MiCA Framework: A Landmark Regulation Facing Early Implementation Challenges
MiCA’s Significance as a Global Precedent
The European MiCA Regulation, coming into effect on December 30 2024, is a major milestone for the global digital asset industry. After years of legislative efforts, it moves beyond patchwork national regimes to create the first comprehensive, harmonised, cross-border crypto-asset regulation. By setting clear rules and requiring market participants to obtain prior authorisation, MiCA aims to provide legal certainty for a volatile market. It positions the EU as a leader in global crypto supervision.
The regulation’s core, based on the EU single market principles, includes a “passporting” mechanism. This allows a CASP authorised by an NCA in one Member State to provide services across all 27 Member States without separate licences. It aims to create a competitive, dynamic market and ensure high investor protection across the Union. In a €3.5 trillion global crypto market, the EU’s unified framework is key to advancing digital assets and their integration into finance.
The Emergence of Critical Fissures
Despite the ambitious design and the extensive coordination efforts led by ESMA during the implementation phase, the joint paper from the AMF, FMA, and CONSOB asserts that the application of the regulation is “far from resolving all the difficulties raised by this otherwise rapidly evolving market”. The first few months of operation have, according to the authorities, revealed “major weaknesses in the text, notably in its approval and supervision mechanisms”. The central thesis of their critique is that the decentralised enforcement of a unified rulebook has led to “significant differences in implementation between jurisdictions”.
This issue is a fundamental flaw, causing a fragmented reality on the ground. Authorities note that supervisory convergence between NCAs often reaches its limits and is insufficient to ensure uniform MiCA standards. This divergence could undermine the regulation’s goals, risking investor protection and the competitiveness of compliant European entities. Authorities warn that if unaddressed, NCAs may need to use precautionary measures to protect national investors, hinting at the power of host Member States to challenge or limit passporting rights—measures the AMF calls the “atomic weapon.n
The Impetus for a Preemptive “MiCA 2.0”
The proposals made by the French, Austrian, and Italian authorities represent a notably swift and proactive response. The joint paper was published on September 15 2025, less than nine months after MiCA’s full implementation. This tight timeline, unusual in regulatory phases, suggests that the issues identified are not minor teething problems but serious threats that demand urgent course correction. The authorities are not taking a “wait and see” stance; they are proactively seeking to amend the framework before diverse national practices become deeply rooted and potentially cause market instability.
This urgency highlights the need for MiCA to stay aligned with evolving global crypto regulation, referencing recommendations by bodies like the FSB and IOSCO. International efforts have highlighted risks associated with the complex internal structures of major service providers, which could weaken European regulation if left unaddressed. This initiative aims to create a “MiCA 1.5,” a more robust version built on early experience and international best practices, ensuring EU regulation remains effective amid global market changes and supervisory arbitrage.
II. Critical Deficiencies in the Current Framework: An Analysis of Regulatory Gaps and Market Risks
The joint paper offers a detailed diagnosis of the specific weaknesses that have emerged during MiCA’s initial phase of implementation. These deficiencies are not isolated technical issues but are interconnected, forming a chain of causality that starts with regulatory gaps and leads to tangible risks to market integrity, investor protection, and the EU’s digital asset ecosystem’s competitiveness. The analysis highlights three main areas of concern: the fragmentation of supervision causing regulatory arbitrage, significant gaps in investor protection concerning cross-border activities, and an ensuing decline in the EU’s market competitiveness.
A. Regulatory Fragmentation and the Peril of Supervisory Arbitrage
The primary structural issue identified by authorities is the tension between MiCA’s goal of a unified, harmonised regulation and its real-world implementation across a decentralised network of 27 different NCAs. Although the law’s text is consistent, its application, interpretation, and supervision levels vary. The paper states unequivocally that the initial months have “demonstrated significant differences in implementation between jurisdictions”. This divergence creates an uneven playing field and, more worryingly, offers an incentive for firms to engage in regulatory arbitrage.
This fragmentation leads large, cross-border CASPs to opportunistically choose jurisdictions for their primary authorisation, often selecting Member States with more lenient, faster, or less resource-intensive processes. Once licensed, they can use the MiCA passport to operate across the Union, exporting their home regulator’s standards to all 27 Member States. This risks a regulatory race to the bottom, with jurisdictions competing to attract crypto businesses, fueling supervisory competition.
These concerns are not just theoretical. A peer review by ESMA in July 2025 examined the Malta Financial Services Authority (MFSA) authorisation process. It found that the MFSA had approved CASPs despite unresolved issues like inadequate ICT infrastructure assessments, unresolved AML/CFT cases, and incomplete conflict of interest evaluations. The report questioned the process’s rigour, confirming fears by the AMF, FMA, and CONSOB that supervisory convergence has limits. It warned that the passporting mechanism might transmit risks from weaker jurisdictions to the EU.
B. Investor Protection Gaps and Cross-Border Vulnerabilities
Beyond the issue of supervisory fragmentation, the authorities highlight a critical loophole that directly undermines investor protection: the use of third-country platforms. They describe a specific business model where major global crypto conglomerates, legally based in non-EU jurisdictions, access European customers through brokers authorised in the EU as CASPs. These EU-based intermediaries often “simply route orders” to the parent or affiliated trading platform situated outside the Union.
This structure creates a substantial supervisory and regulatory black hole. The core functions of the trading venue—the order book, the matching engine, data storage, and key operational and risk-management decisions—all occur outside the EU and beyond the direct oversight of any NCA. This makes it very difficult for authorities to monitor activity, as “order flows can be difficult to trace” and they “do not have access to data relating to the resulting transactions”.
For European investors, the consequences are severe. When their orders are executed on these non-EU platforms, they may not benefit from the full suite of protections guaranteed by MiCA. These lost safeguards are substantial and include:
The prohibition on a platform engaging in matched principal trading without the client’s explicit consent.
Protections are in place to ensure the resilience of the platform’s systems to cybersecurity risks.
Requirements for the effective detection and prevention of market abuse, such as insider dealing and market manipulation.
Guarantees of transparency regarding the prices and volumes of crypto-assets traded on the platform.
Adding to this issue is the problematic use of “reverse solicitation”, where third-country firms claim that EU clients have approached them independently, thereby bypassing the need for a MiCA licence. The authorities describe this practice as “intrinsically problematic for the effectiveness of MiCA” and argue it should be limited as much as possible, as it forms a significant grey area that can be exploited to bypass EU regulation.
C. Erosion of EU Competitiveness and Market Integrity
Supervisory fragmentation and cross-border loopholes threaten the competitiveness of European market participants. Fully compliant CASPs in diligent EU jurisdictions face higher operational and compliance costs under MiCA than firms with lighter supervision in other Member States or outside the EU, exploiting loopholes. This unlevel playing field harms responsible actors and market integrity.
Ongoing supervision fragmentation threatens the core idea of a single crypto-assets market. Authorities warn that if centralising reforms aren’t made, higher-standard NCAs might impose national measures to protect local investors from risks via passporting. The AMF calls passporting rights an “atomic weapon,” underlining the seriousness of this threat. Such protective actions could fragment the European market along national lines, undermining MiCA’s goal and trapping liquidity domestically. This reversal would damage the progress of a unified, competitive EU crypto market, harming businesses and investors.
Table 1: Summary of Proposed Reforms to the MiCA Regulation
Proposal | Problem Addressed | Proposed Solution | Intended Benefits |
1. Centralised ESMA Supervision | Regulatory fragmentation, supervisory competition and arbitrage; insufficient oversight of systemic CASPs. | Transfer of direct authorisation, supervision, and sanctioning powers to ESMA for “significant” CASPs. | Ensure uniform application of rules; eliminate regulatory arbitrage; provide adequate, proactive supervision of systemic players; reduce overall supervision costs. |
2. Stricter Rules for Third-Country Platforms | Circumvention of MiCA via non-EU platforms, erosion of investor protection, and supervisory black holes. | Mandate that EU intermediaries execute orders only on MiCA-compliant or “equivalent” platforms; tighten rules on delegating core functions. | Close the third-country loophole; ensure EU investors receive full MiCA protections; enhance supervisory visibility and control; export EU regulatory standards. |
3. Mandatory Cyber-Security Audits | CASPs are highly vulnerable to cyber threats due to the lack of upfront verification of cyber-resilience at the authorisation stage. | A mandatory, independent cybersecurity audit is required as a prerequisite for MiCA authorisation, with periodic renewals. | Guarantee greater security for investor assets; reinforce investor confidence and sector credibility; embed cyber-resilience as a core prudential requirement. |
4. “One-Stop Shop” for Token Offerings | Inefficient, fragmented, and inconsistent processing of pan-European token offerings; legal uncertainty for issuers. | Centralise the filing, scrutiny, and management of token offering white papers (excluding stablecoins) with ESMA. | Simplify the process for issuers; ensure uniform and consistent scrutiny; avoid market fragmentation; foster an accurate EU primary market for crypto-assets. |
III. Proposal for Reform 1: Centralising Supervision under ESMA for Significant CASPs
The primary and most structurally significant proposal put forward by the AMF, FMA, and CONSOB is the establishment of direct, centralised European oversight for major crypto-asset service providers. This reform is regarded as the key solution to the regulatory fragmentation and supervisory rivalry that authorities consider the greatest threats to the success of Mica. It signifies a substantial shift from a decentralised enforcement model with central coordination to one of direct EU-level authority over the most systemically important market participants.
A. The Rationale for Centralisation
The joint paper argues that MiCA’s current supervisory framework is fundamentally inadequate for overseeing a market that is inherently cross-border and dominated by a few large, global players. The existing system is described as an “a posteriori reporting regime,” where NCAs supervise and are only required to report information to ESMA’s Board of Supervisors. This model, the authorities contend, is reactive rather than proactive and “does not allow for effective, proactive supervision of players” whose activities span the entire Union.
The centralisation arises from the crypto market structure. An ESMA report shows 90% of trading happens on ten large platforms, which are global conglomerates with complex structures, cross-border activities, and systemic risk potential beyond a single NCA’s reach. The current decentralised model mismatches a firm’s activities with its supervisor’s scope, especially when supervised by a small Member State. Centralising supervision under ESMA helps align oversight with the market’s economic reality, providing a pan-European approach to critical risks.
B. Architectural Precedents and Proposed Structure
The proposal does not call for the creation of a new supervisory model from scratch. Instead, it explicitly advocates for drawing inspiration from well-established precedents in traditional EU financial regulation, demonstrating a desire to integrate crypto supervision into the mainstream of European financial oversight. The two primary models cited are:
The Single Supervisory Mechanism (SSM): Established in the wake of the sovereign debt crisis, the SSM conferred direct supervisory powers upon the European Central Bank (ECB) for the largest and most significant banks in the Eurozone. This created a two-tiered system, with the ECB directly overseeing systemic institutions while NCAs continued to supervise smaller, less significant banks. The proposal for ESMA supervision of significant CASPs directly mirrors this structure.
EBA Supervision of Significant Stablecoins: MiCA itself already contains a precedent for centralised supervision. The regulation grants the European Banking Authority (EBA) direct supervisory powers over the issuers of “significant” asset-referenced tokens (ARTs) and e-money tokens (EMTs). The authorities argue that the logic for centralising supervision of systemic stablecoins applies with equal, if not greater, force to the large, multi-service platforms that form the core infrastructure of the crypto market.
Crucially, this proposal does not seek to improve coordination or impose stricter guidelines from ESMA. Instead, it is a call for a “genuine transfer of powers to ESMA.” This would involve equipping ESMA with a full range of supervisory tools, including the authority of “approval, supervision and direct sanction over these players.” The authorities also emphasise that this move towards centralised supervision aligns with the future mandate of the European Anti-Money Laundering Authority (AMLA), which is expected to begin directly supervising certain high-risk financial entities, potentially including some CASPs, from 2028.
C. Anticipated Benefits and Operational Impact
This reform aims to address issues in the current system by ensuring consistent rules across the Union and establishing a single supervisor to prevent jurisdictional opportunism and reduce supervision costs. A centralised authority would streamline oversight, eliminate duplication, and establish a two-tier system: significant CASPs would transfer to ESMA for more rigorous supervision, thereby simplifying compliance; smaller CASPs would remain under national authorities, potentially impacting competition and compliance. ESMA’s standards for major firms are likely to raise expectations industry-wide.
IV. Proposal for Reform 2: Fortifying the EU Perimeter against Non-Compliant Third-Country Platforms
The second proposal directly addresses the authorities’ concern that MiCA’s regulatory protections are being systematically undermined by business models involving entities outside the Union. It aims to strengthen the EU’s regulatory scope by preventing European investors from being directed towards non-compliant offshore platforms through regulated European intermediaries. This reform seeks to reassert regulatory sovereignty over the entire service chain provided to EU clients, regardless of where the underlying infrastructure is located.
A. Closing the Third-Country Loophole
The proposal targets a specific, problematic business model where a global crypto exchange, legally based in a third country, avoids requiring a MiCA licence by onboarding its EU clients through a locally licensed CASP, which then acts as a simple conduit or order router to the offshore platform. This setup creates the supervisory black hole described earlier, where the core trading activity takes place beyond the reach of EU law.
The solution mandates that European intermediaries executing crypto-asset orders must do so on platforms subject to MiCA or equivalent regulation. This closes the loophole by placing clear, non-delegable responsibility on licensed intermediaries, making EU-based CASPS responsible for ensuring client orders go only to compliant venues. It shifts compliance to regulated entities and incentivises unregulated offshore platforms to follow EU standards if they want to access EU order flow.
B. The “Equivalence” Mechanism and Delegation Rules
This proposal introduces an equivalence regime, where the European Commission can recognise a third country’s legal system as equivalent to the EU’s. This allows EU intermediaries to connect with authorised platforms in that country. The assessment would be overseen by the European Commission, with ESMA’s support. While providing a path for cross-border business with well-regulated jurisdictions, it also acts as a gatekeeper, limiting access from jurisdictions with weak or no regulation.
To prevent circumvention, the proposal supports tightening rules on delegating essential functions by a licensed CASP to a third-country entity, like an intragroup service provider. Delegation must meet strict criteria, such as having an “equivalent” legal framework in the third country and a formal cooperation agreement between the EU supervisor and the foreign authority. Alternatively, the third-country entity could be subject to “full extra-territorial supervision” by the CASP’s home NCA or ESMA, ensuring compliance.
C. Implications for Global CASPs and EU Intermediaries
The strategic implications of this reform for global crypto players are profound. A major international exchange that currently serves the EU market using the order-routing model would be forced to make a difficult choice. Its options would be:
Establish a Full EU Presence: Obtain a full MiCA license for a trading platform entity within the EU, subjecting its entire EU-facing operation to direct European supervision.
Seek an Equivalence Decision: Lobby its home-country government and regulators to align their framework with MiCA’s standards and formally seek an equivalence decision from the European Commission. This process can be lengthy, technical, and highly political.
Withdraw from the EU Market: If neither of the above options is feasible or desirable, the firm would have to cease providing services to EU clients.
EU-based intermediaries, especially brokers connecting to multiple global liquidity venues, would face significant operational challenges. They must perform due diligence on each platform to ensure it is MMiCA-authorised or operates in an equivalent jurisdiction. This raises compliance demands, legal risks, and operational complexity, likely causing venue consolidation. This reflects the “Brussels Effect,” where the EU’s large market influences third countries and international firms to adopt its regulations, extending its rules worldwide.
V. Proposal for Reform 3: Mandating Cyber-Resilience through Independent Audits
The third proposal focuses on what authorities see as an existential threat to the crypto-asset sector: cybersecurity. Recognising that CASPs operate within a “fully digitalised system” and are “highly vulnerable to cyber-attacks,” this reform intends to elevate cyber-resilience from a matter of operational best practice to a fundamental, verifiable part of prudential regulation. It aims to provide authorities with a strong tool to ensure firms are secure before they are allowed to manage client assets.
A. From DORA Compliance to Proactive Auditing
The analysis highlights the EU’s progress with DORA, which sets high digital resilience standards for financial entities, including CASPs. It notes a gap in verifying compliance during initial authorisation. Early MiCA implementation shows that cybersecurity requirements are a significant challenge for applicants and NCAs. The European Commission found that the original MiCA lacked a legal basis to require cybersecurity certification at this stage.
A cyber security audit by independent providers before authorisation would be a simple but impactful reform, shifting the assessment from ongoing supervision—mainly based on self-attestation—to a mandatory, independently verified gatekeeping process. Firms failing this audit would be blocked from entering the market. This approach is informed by successful national examples, such as France’s 2019 PACTE law, which authorises the AMF to mandate such audits for digital asset service providers.
B. Scope and Standards of the Proposed Audit
The proposed audit aims to be comprehensive and tailored to the specific risks of the crypto-asset industry. Its scope would include key areas such as the “protection of assets, resilience to cyber-attacks, and incident management”. The regime would emphasise measures designed to counter sector-specific threats, including the compromise of wallets holding crypto-assets, data leaks, denial-of-service attacks, and identity theft. The audit would evaluate a candidate’s ability not only to prevent attacks but also to “react effectively” to them and to investigate incidents or fraudulent activity.
To ensure quality and consistency in audits across the Union, the proposal avoids leaving auditor qualification to national discretion. Instead, it proposes a “harmonised Europe-wide certification scheme for cyber security auditors” under European Regulation 2019/881, ensuring auditors have independence and competence.
Furthermore, the audit would not be a one-time event at the authorisation stage. The proposal mandates that it “should be renewed at regular intervals.” This ensures that a CASP’s defences adapt to changes in technology and the emergence of new threats. The requirement would also apply retroactively to entities already authorised as CASPs once the new rules are introduced, ensuring a consistent standard of security across the entire market.
C. Enhancing Investor Confidence and Sector Credibility
This proposal seeks to go beyond technical compliance, aiming to enhance market security to “reinforce investor confidence and the credibility of the crypto-asset sector.” High-profile hacks have hurt the crypto industry’s reputation, slowing mainstream adoption. By making verified cybersecurity mandatory in the EU, authorities want to create a trusted, regulated ecosystem.
This proposal redefines “prudential soundness” for the digital age. Traditionally, prudential regulation focused on capital adequacy and liquidity. It suggests that for digital entities protecting assets, cyber-resilience is as vital as capital, becoming a third, crucial pillar of oversight in the crypto sector.
VI. Proposal for Reform 4: Streamlining Pan-European Offerings via an ESMA “One-Stop Shop”
The fourth and final proposal concentrates on the main markets for crypto-assets, especially the process for issuers planning to offer new tokens to the public across the European Union. Although it appears more administrative than the other proposals, this reform is crucial for establishing a genuine and efficient single market for crypto-asset capital formation. It aims to replace the current fragmented and inefficient notification system with a centralised and streamlined process overseen by ESMA.
A. Addressing Passporting Inefficiencies
The Mica system for pan-European token offerings follows a decentralised supervision model. Issuers must prepare a crypto-asset white paper and notify their NCA in their home Member State. To offer tokens elsewhere in the EU, they must use passporting to inform each host country’s authorities. However, authorities argue this process is ill-suited, as crypto-asset offerings are usually pan-European and target most member states.
Maintaining this fragmented system, where each of the 27 NCAs might receive similar passport filings, causes issues. It leads to “risks of inconsistent document processing,” as authorities may interpret disclosure requirements differently or apply varying scrutiny levels. The MiCA text is unclear on the “level of scrutiny” a host authority must perform on a passported white paper before an offer in its jurisdiction, creating “legal uncertainty” for issuers. This complexity results in “unnecessary administrative costs” for issuers managing multiple filings and authorities processing them. This friction hampers primary market efficiency.
B. The “One-Stop Shop” Model
To address these inefficiencies, authorities propose establishing a “one-stop shop at the European level under ESMA’ for all token offerings, excluding stablecoins. This expands ESMA’s responsibilities beyond creating a public register of white papers, as Article 109 of MiCA currently requires, to include centralising registration, filing, review, and management.
Under this new system, an issuer would submit its white paper once to ESMA. ESMA would be responsible for reviewing the document for compliance with MiCA’s disclosure requirements. Once ESMA approves the white paper, the issuer would automatically be granted a passport to offer the token across the entire EU, without needing any further national-level notifications or approvals. This would create a single, streamlined pathway to access the whole of the European market.
C. Ensuring Legal Certainty and Consistent Scrutiny
The main benefits of the one-stop shop model are simplicity, consistency, and legal certainty. It would “simplify the process for issuers,” lowering their administrative burdens and costs. More importantly, it would “ensure uniform application of the rules,” with all white papers assessed against a single standard by one authority. This would prevent market fragmentation from differing national interpretations of MiCA and increase legal predictability.
This proposal marks a key step toward a genuine EU Capital Markets Union (CMU) for digital assets. The broader CMU aims to deepen integrated capital markets, enhancing funding access and investor opportunities. Removing cross-border barriers for primary token issuance, the ESMA one-stop shop would effectively create a “CMU for crypto.” It would make the EU more attractive and competitive for Web3 innovation and capital formation, enabling legitimate projects to access a market of 450 million through a single, efficient, predictable regulation.
VII. Strategic Implications and Forward Outlook for the European Crypto-Asset Market
The four proposals from the French, Austrian, and Italian financial market authorities are more than just a technical update to the MiCA Regulation. They offer a clear and consistent vision for the future of crypto-asset supervision in the European Union—a future marked by increased centralisation, a broader regulatory scope, and closer alignment of crypto oversight with the principles and frameworks of mainstream financial regulation. If implemented, these reforms would create a “MiCA 2.0,” fundamentally changing the strategic landscape for all market participants.
A. Convergence with Global Standards (FSB/IOSCO)
A key goal is to keep the EU’s framework strong and credible globally. The paper stresses aligning MiCA with international standards like FSB and IOSCO, recognising that regulatory divergence poses risks. Addressing issues such as large crypto conglomerates and cross-border cooperation aims to future-proof Mica. This alignment ensures the EU leads in crypto regulation and can operate alongside other jurisdictions, boosting its credibility and role in global discussions.
B. The Unmistakable Trajectory Towards Greater Centralisation
The central theme across proposals is the shift from a decentralised supervisory model to increased EU centralisation, notably with direct ESMA oversight of key CASPs and a one-stop shop for token offerings. This mirrors the post-2008 development of EU financial regulation, including the European Supervisory Authorities and Banking Union, to manage systemic, cross-border risks. Applying this to crypto reflects authorities’ recognition that the expanding, interconnected crypto market needs supervision by a broad, pan-European authority.
C. Key Considerations for Market Participants
The strategic implications of this proposed regulatory evolution vary significantly for different segments of the market:
For Global CASPs: The era of leveraging regulatory inconsistencies across the EU to optimise market access appears to be drawing to a close. The proposals, particularly the move to centralise supervision and fortify the rules for third-country platforms, will force a strategic reckoning. Major global players will face a stark choice: commit to establishing a fully compliant, substantively managed, and directly supervised presence within the EU, or rely on the uncertain and potentially political process of seeking a formal “equivalence” decision for their home jurisdiction. The path of least resistance is being deliberately closed off.
For EU-Based CASPs: The prospect of a bifurcated supervisory landscape—with significant firms overseen by ESMA and smaller ones by NCAs—will require careful strategic positioning. Gaining the status of an ESMA-supervised entity could become a “quality seal,” enhancing credibility with institutional clients and partners. However, it will also come with higher compliance costs and supervisory intensity. Smaller firms may avoid the direct gaze of ESMA, but they will not be immune to its influence. The high standards set by ESMA for the “premier league” of CASPs will inevitably cascade down, raising supervisory expectations and best practices for all market participants.
For Investors and Issuers: The ultimate aim of these reforms is to create a safer and more efficient market. If enacted, investors would benefit from stronger, more consistently applied protections, particularly against cyber threats and the risks associated with opaque offshore platforms. Issuers of new tokens would gain a much more streamlined and predictable path to accessing the entire EU market, albeit one that will likely involve more rigorous upfront scrutiny of their white papers and business models.
In conclusion, the joint proposals from the AMF, FMA, and CONSOB serve as a blueprint for the next phase of European crypto-asset regulation. They act as a preemptive measure against the fragmentation that threatens the integrity of the single market and as a clear statement of intent to establish a robust, centralised, and globally respected supervisory framework. For all stakeholders in the digital asset ecosystem, these proposals act as an essential guide, signalling a clear direction towards a more mature, integrated, and resilient European market for crypto-assets.
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