The European Commission is considering a plan to consolidate oversight of stock and cryptocurrency exchanges, aiming to create a more competitive capital market within the bloc, mirroring the structure of the U.S. Securities and Exchange Commission (SEC). The proposal would expand the European Securities and Markets Authority’s (ESMA) jurisdiction to include direct supervision of stock and crypto exchanges, as well as crypto asset service providers and other trading infrastructure. A draft of the proposal is expected to be published in December.
Currently, the EU operates with numerous national and regional regulatory agencies, which increases the cost of cross-border trade and hinders the development of startups. Empowering a single supervisory body like the SEC could be the next step for the EU’s “capital markets union,” a move supported by European Central Bank (ECB) President Christine Lagarde. Lagarde stated in November 2023 that creating a European SEC by extending ESMA's powers, with a broad mandate including direct supervision, could mitigate systemic risks posed by large cross-border firms.
The proposal would also enable ESMA to have the final say in disputes between asset managers, issuing binding decisions without direct supervision. This initiative aims to reduce regulatory fragmentation and streamline processes across member states.
However, some member states like Luxembourg, Malta and Ireland have voiced concerns over the centralization plans, fearing the impact on their domestic competitiveness, particularly within their crypto hubs. Verena Ross, head of ESMA, believes that countries having their own regulatory teams has resulted in inefficiencies. She explained that Brussels is drafting proposals to shift oversight of parts of the EU's financial markets from national regulators to ESMA, adding that the move would strengthen integration and global competitiveness.
A potential challenge arises from the intersection of the Markets in Crypto-Assets (MiCA) regulation and the Payment Services Directive (PSD2). Starting in March 2026, stablecoin firms may face a dual licensing burden, requiring both a MiCA crypto license and a separate payment services license for activities like custody and transfer of euro-backed stablecoins. Industry leaders warn that this duplication could create a compliance crisis, with companies needing to meet combined capital requirements, potentially undermining MiCA's original goal of unified oversight.
Patrick Hansen, Circle's EU policy lead, has called the situation a "regulatory own goal," arguing it undermines MiCA's original goal of unified oversight. To address these concerns, the European Banking Authority (EBA) issued a No Action Letter in June 2025, granting a transition period until March 2026 for firms to adapt.
The EU's regulatory push highlights the tension between fostering innovation and protecting investors. Proponents argue that centralization and stricter oversight will foster trust and stability, while critics fear the added complexity could deter investment and drive businesses to more accommodating jurisdictions.
