October 11, 2025 — In a bold push to bring crypto regulation under more centralized control, France is calling for the European Union to hand authoritative supervisory powers over key cryptocurrency firms to ESMA (European Securities and Markets Authority).
France’s Proposal: Why ESMA, and Why Now?
At the ACPR–AMF Fintech Forum in Paris, François Villeroy de Galhau, Governor of the Bank of France, insisted that ESMA should take on direct oversight of major crypto-asset issuers under the EU’s crypto regulation framework, MiCA (Markets in Crypto-Assets).
His argument:
- The current system, where licensing and supervision occur at national level, fosters regulatory fragmentation, allowing firms to shop for more lenient jurisdictions.
- ESMA, as a centralized European body, could enforce uniform rules across all Member States, reducing enforcement gaps and ensuring consistent investor protection.
- He also flagged stablecoin multi-issuance under MiCA, where the same stablecoin can be issued both inside and outside the EU with partial reserves, as a weakness that threatens financial sovereignty and opens arbitrage opportunities.
In his view, allowing national regulators to interpret and enforce MiCA in divergent ways undermines trust and stability in Europe’s crypto ecosystem. He went so far as to say France might block passporting rights of crypto firms licensed elsewhere in the EU if they don’t meet consistent standards.
EU in Motion: ESMA’s Expanding Role
France’s push isn’t happening in a vacuum. The European Commission is reportedly preparing a regulatory overhaul that would shift oversight of several financial market sectors, including crypto platforms, stock exchanges, and clearing houses, from national regulators to ESMA.
ESMA Chair Verena Ross has indicated support for this path, describing it as vital to reducing fragmentation and making Europe’s capital markets more globally competitive.
Still, not all are on board. Smaller nations such as Malta and Luxembourg have voiced resistance, warning that centralizing power could stifle agility and innovation, particularly in jurisdictions that have become crypto hubs.
Ramifications for Crypto & Stablecoins
If France and its allies succeed, the impact would be profound:
- No more jurisdiction shopping: Firms could no longer exploit lax national regimes; they’d be regulated under a single, EU-wide standard via ESMA.
- Stricter stablecoin control: Expect tougher rules on multi-issuance, reserve requirements, and cross-border issuance, especially for USD-pegged coins.
- Compliance burdens rise: Smaller firms may struggle with new layers of oversight, higher regulatory cost, and stricter enforcement.
- Potential fragmentation tensions: Countries that currently host many crypto firms may resist giving up control, perhaps even challenging the new framework legally.
In fact, France has already threatened to refuse the EU passporting rights for firms licensed elsewhere if they don’t meet its standards, a “nuclear option” that underscores how serious Paris is about enforcement parity.
Balancing Oversight with Innovation
While the logic of a unified supervisor is strong, leveling the playing field, reducing regulatory arbitrage, and strengthening investor protection, there are real concerns:
- Overregulation may stifle DeFi innovation and emergent crypto sectors that rely on flexibility and experimentation.
- Central bureaucracy might burden startups with compliance overheads, pushing them to relocate or scale back within Europe.
- Political resistance is high. Member states like Malta and Luxembourg are protective of their regulatory roles and economic interests.
ESMA itself seems cautious. In a recent interview, Ross remarked that the EU lacks a unified view on expanding ESMA’s supervisory powers. They understand the pressure, but the path ahead is politically and technically complex.
What to Watch Next
- The European Commission’s formal proposal: Will it grant ESMA sweeping authority, or selective oversight?
- Member state reactions: How strongly will small states resist? Will countries like Germany or Italy align with France?
- How crypto firms will reorient: Which firms adapt, consolidate, or relocate?
- Stablecoin regulation: Will multi-issuance be curtailed or banned?
- Enforcement in the transition: Which firms will face scrutiny or delisting during the changeover?
France’s call to hand crypto supervision power directly to ESMA could be a turning point in European digital finance.
If successful, this shift may mark the end of regulatory patchworks across 27 countries and usher in a more unified, credible, and enforceable EU crypto framework.
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