The European Commission is drawing up plans to transfer supervision of cryptocurrency firms, stock exchanges and clearing houses from national regulators to the European Securities and Markets Authority (ESMA). ESMA Chair Verena Ross confirmed this to the Financial Times. Last month EU Commissioner Maria Luís Albuquerque said the Commission was exploring transferring the oversight of the largest cross border entities to ESMA. But some EU nations are not keen.
The move is seen as a critical step towards a single European market. Ross believes this is essential for ‘having a capital market in Europe that is more integrated and globally competitive’. In a separate move, the European Central Bank is eyeing its long term wholesale CBDC Project Appia as one of the avenues to support a single market.
This dynamic mirrors a similar tension in the US between centralized and decentralized supervision in the form of Federal versus state regulators. Some view State regulators as playing a critical role in innovation. A good example is the New York State Department of Financial Services (NYDFS) which over the past ten years has licensed several of the world’s largest crypto custodians and stablecoins. The first Federal regulation, the GENIUS Act for stablecoins, was approved in the middle of this year.
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