As the European Union’s pioneering Markets in Crypto-Assets (MiCA) regulation begins its rollout, financial regulators in France, Austria, and Italy are voicing concerns about inconsistencies that could jeopardize the EU’s financial stability and investor protection. These market watchdogs are advocating for stronger oversight across the crypto landscape to avert potential pitfalls.
A Call for Enhanced Oversight
In a joint statement, France’s Autorité des Marchés Financiers (AMF), Austria’s Finanzmarktaufsichtsbehörde (FMA), and Italy’s Consob highlighted “major differences” in how MiCA is being enforced across member states. This uneven implementation, they argue, could lead to a situation where crypto firms exploit regulatory arbitrage by gravitating towards jurisdictions with lax enforcement. Such a scenario could not only undermine investor protection but also weaken Europe’s competitiveness in the rapidly evolving digital asset market.
The regulators’ concerns are not without merit. MiCA, while a groundbreaking attempt to create a unified regulatory framework for digital assets, is still in its infancy. The first few months of its application have revealed gaps that could be exploited without urgent intervention.
Four Proposals for a Unified Approach
To address these challenges, the regulators have proposed four key measures. At the forefront is the suggestion to grant the European Securities and Markets Authority (ESMA) direct supervision over the largest crypto-asset service providers. By centralizing oversight at the EU level, they believe it will ensure more consistent enforcement of MiCA provisions across the bloc.
Another significant concern is the practice of EU intermediaries routing orders to offshore platforms that aren’t covered by MiCA. This loophole, they argue, leaves investors vulnerable to risks outside the EU’s regulatory purview. The regulators are calling for stringent measures to close this loophole, ensuring that all platforms dealing with EU investors adhere to the same high standards.
Cybersecurity is another critical area of focus. Given the sector’s high susceptibility to hacks, the regulators recommend mandatory, independent cybersecurity audits before firms receive or renew their MiCA licenses. This step is crucial to bolster the sector’s defense against cyber threats and protect investor interests.
Lastly, the establishment of a centralized filing system for token white papers is proposed. Such a system would simplify cross-border offerings and provide legal clarity, facilitating a more streamlined regulatory process for businesses and regulators alike.
Balancing Regulation and Innovation
While the call for tighter controls is driven by legitimate concerns, there’s an ongoing debate about the balance between regulation and innovation. Overregulation, critics argue, could stifle the crypto industry’s growth and drive firms outside the EU, seeking more favorable environments.
Proponents of the regulators’ proposals counter that without stringent oversight, the risks of financial instability and investor harm are too high. They assert that a robust regulatory framework could, in fact, enhance the EU’s attractiveness as a global leader in digital assets by ensuring a safe and predictable environment for innovation.
Aligning with Global Standards
The need for alignment with international standards set by bodies such as the Financial Stability Board and the International Organization of Securities Commissions (IOSCO) is also a pressing concern. The regulators stress that without swift adjustments to MiCA, national authorities might resort to emergency measures, risking fragmentation of Europe’s digital asset market.
This alignment is crucial not just for the EU’s internal market, but also for its position on the global stage. As the digital asset landscape becomes increasingly interconnected, adherence to international standards will be key in maintaining a competitive edge.
Looking Ahead
As the MiCA framework continues its rollout, the coming months will be pivotal in determining the EU’s approach to crypto regulation. The proposals put forth by France, Austria, and Italy highlight the urgent need for a cohesive strategy that balances the needs of innovation with the imperative of investor protection.
The debate over crypto regulation is far from over. As the EU seeks to refine its approach, the perspectives of both regulators and industry stakeholders will be crucial in shaping a future where digital assets can thrive securely and sustainably within the regulatory framework.
In conclusion, as Europe navigates the complexities of crypto regulation, the call for stronger EU oversight underscores the need for a unified approach. The path forward will require collaboration and compromise, but with the right measures, the EU can solidify its position as a leader in the digital asset space, offering a model for other regions to follow.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
