Austrian, French, Italian regulators threaten to block other EU MiCA crypto firms

Italy’s CONSOB, France’s AMF, and Austria’s FMA are concerned about varying implementations of Europe’s MiCA crypto regulations across jurisdictions. They believe countries that have been accommodating are the most attractive, triggering a race to the bottom and creating risks for investors in their own countries through the EU passporting process. MiCA regulations contain a clause allowing local regulators to block problematic licensed EU companies and offerings, but there’s a process involved.

Stepping back, a key purpose of MiCA is to create homogenous regulations across the EU, allowing a crypto asset service provider (CASP) licensed in one country to have a “passport” to service clients across all EU member states. However, the implementation of the rules is overseen by each member state, with CASPs being able to pick and choose in which country they choose to register.

The first request by the three countries is that the European Securities and Markets Authority (ESMA) should oversee the largest CASPs. They argue: MiCA confers direct oversight powers over systemic stablecoins (electronic money tokens) to the European Banking Authority (EBA), so why shouldn’t ESMA oversee the largest CASPs? This is particularly relevant given that ten crypto exchanges handle 90% of transactions.

In June ESMA published the results of a peer review it conducted into the Malta Financial Services Authority, highlighting concerns about its crypto authorization process. Malta responded with a robust defense. The country now hosts two top ten exchanges, OKX and Crypto.com, as well as top 20 exchange Gemini. Binance, by far the world’s largest crypto exchange, has yet to receive an EU CASP license, although it has single country licenses in six EU states, including France and Italy.

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