France Pushes for Centralized EU Crypto Oversight Under ESMA

France has sparked a major regulatory debate across Europe, calling for the continent’s crypto regulation to be handled centrally by the European Securities and Markets Authority (ESMA) in Paris. The proposal, made by the Governor of the Bank of France, aims to curb fragmented oversight and limit risks associated with stablecoins and cross-border crypto activities.

Key Takeaways

• Bank of France wants ESMA, not national agencies, to supervise major crypto firms in the EU

• Proposal aims to ensure consistent rule enforcement and prevent regulatory loopholes

• Rising concern over dollar-backed, multi-issuer stablecoins undermining the euro

• Calls grow for stricter stablecoin rules and for reforming the current MiCA passporting system

France’s Call To Empower ESMA

During a recent fintech forum in Paris, Bank of France Governor François Villeroy de Galhau urged that ESMA be granted full supervisory authority over crypto-asset issuers throughout the EU. The initiative would shift supervision from national regulators to a single, Paris-based authority—a decisive step, according to the governor, to protect financial sovereignty and create a level playing field for investors and businesses.

Villeroy de Galhau warned that the current patchwork of oversight can lead to regulatory arbitrage, allowing crypto firms to exploit weaker rules in individual countries and increasing systemic risks. He advocated for ESMA’s direct supervision to ensure that major players are held to uniform standards, regardless of their location within the bloc.

Stablecoin Loopholes At The Heart Of The Debate

The debate comes at a time when dollar-backed stablecoins and multi-issuer arrangements are gaining traction in Europe. Under the Markets in Crypto-Assets (MiCA) framework, the same stablecoin can be issued both inside and outside the EU, but only needs partial reserves—something that, according to French officials, could fragment monetary oversight and undermine the euro’s global standing.

In response, both the European Systemic Risk Board (ESRB) and the Bank of Italy have joined France in calling for a ban or significant restrictions on these multi-issuance models, citing legal and financial stability concerns. These calls signal a shift toward stricter stablecoin controls within the EU’s evolving regulatory landscape.

Passporting And Regulatory Arbitrage

A key feature of MiCA is the passporting system, which allows crypto firms licensed in one member state to operate across the entire EU. While intended to simplify market access, this has raised alarms among regulators: weaknesses in one country’s oversight could quickly ripple across the entire bloc.

Recent incidents—including criticisms of Malta’s licensing practices—have highlighted these vulnerabilities. France’s own financial authority has even threatened to challenge the passporting system if standards among national supervisors remain inconsistent.

What’s Next For The EU Crypto Market?

The French push for ESMA-driven, centralized oversight is part of a wider momentum in Brussels, with the European Commission exploring moves to expand ESMA’s remit across more financial sectors. Supporters argue it would mirror existing centralized securities supervision, while critics fear erosion of national regulatory powers and slower responsiveness to local market issues.

As MiCA comes into effect and digital assets continue to reshape finance in Europe, the outcome of this debate will determine whether the EU can both integrate its crypto markets and safeguard monetary stability. The coming year is likely to be pivotal for how digital finance is policed—potentially setting a precedent for other world regions.

Sources

• Bank of France Pushes for ESMA Oversight, Stricter Stablecoin Rules, Cointelegraph.

• Bank of France Pushes for Stronger EU Crypto Oversight, CoinCentral.

• France pushes to centralize crypto rulemaking under ESMA, Crypto News.

• Esma crypto supervision: France urges Paris-based ESMA, The Cryptonomist.

• France Seeks Centralized ESMA Control To Curb Regulatory Arbitrage, FinanceFeeds.
  
  

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