What to Know:
- France urges EU-wide crypto oversight via ESMA to ensure consistent rules and stronger investor protection.
- MiCA already sets EU rules for crypto firms, stablecoins, and AML compliance; new oversight would unify enforcement.
- Stronger EU supervision may make platforms safer but increase compliance costs and reduce regulatory arbitrage.
France is pushing for a big change in how Europe watches over crypto companies. In a speech, the Bank of France’s governor, François Villeroy de Galhau, urged that major crypto firms be directly regulated by Europe’s central market watchdog, ESMA, rather than just national agencies.
He argued that giving ESMA more power would ensure the same rules apply across all EU countries, making crypto regulation more consistent and fair.
Why France Is Pushing for This
France and some other EU nations have grown frustrated with the “patchwork” approach to crypto regulation. The way rules are enforced in different countries right now makes it possible for businesses to work where the rules are less strict.
France wants to close regulatory gaps, better protect investors, and make the EU’s crypto rules stronger overall by giving ESMA more power. The call comes at a time when Europe is already looking to centralize more supervision over crypto firms. ESMA has plans to expand its powers to oversee exchanges, clearing houses, and other market players.
How Europe Already Regulates Crypto
MiCA is the EU’s big crypto law that took effect from late 2024. It sets rules for crypto companies, stablecoin issuers, asset service providers, and more. Under MiCA, stablecoins must be fully backed by liquid reserves at a 1:1 ratio. Algorithmic stablecoins that lack clear backing are disallowed.
The law also requires crypto firms to collect data about senders and receivers whenever crypto is transferred, to reduce money laundering risks. Some EU countries are already working to launch euro-backed stablecoins under MiCA compliance. Banks like ING and UniCredit are part of these efforts.
What Changes If France Wins Its Push
If ESMA gains more control over crypto firms, uniform rules could apply to all EU nations instead of a country-by-country system and stricter oversight of big crypto exchanges, custody firms, and stablecoin issuers. Thus, less chance for firms to exploit weaker rules in certain countries and some countries might resist, fearing loss of control over their financial systems.
France has even threatened to block some crypto firms from operating domestically if they’re licensed in another EU state but not meeting French standards.
The Broader Picture
In addition to oversight of crypto firms, Europe faces challenges around stablecoins and digital cash. The ECB is urging lawmakers to demand equally strong rules for foreign stablecoin issuers so they don’t undercut European standards. Some EU banks are working together to create a euro stablecoin that fits within MiCA’s rules, to compete with U.S. dollar-linked tokens.
This year, the U.S. passed the GENIUS Act to regulate stablecoins. This made EU policymakers work faster on the digital euro and stricter rules for stablecoins. If users switch to stablecoins backed by other countries, Europe could lose its financial independence if the rules aren’t clear.
What It Means?
The push for stronger EU oversight means more consistency for crypto platforms and businesses in Europe, but it also means more rules. For example, they may have to follow stricter audits, governance, and operational standards across the EU, and licensed companies may have fewer chances to take advantage of price differences between countries.
More stable frameworks and clearer protections could help both investors and users. But some businesses may find it hard to follow the same rules if they have to pay more or deal with more complicated situations. The main point for crypto users is that Europe may soon have a crypto market that is more stable and regulated. Companies will probably be safer to work with, but it might be harder to start new projects.
