EU finance ministers agree position limiting ESMA crypto supervision to significant firms

EU finance ministers have agreed the main elements of a negotiating position that would give ESMA, the EU securities regulator, direct supervision of only "significant" crypto asset service providers. Ledger Insights reported the position, agreed on Friday, drops the European Commission's proposal that all MiCA-licensed crypto asset service providers be supervised by ESMA rather than national authorities.

The position would keep MiCA's existing significance test — at least 15 million EU users — and add alternative criteria that lower the bar, Ledger Insights reported. A provider with just over 1 million users could qualify as significant if it also met at least two other tests, such as the value of assets it holds in custody and its trading volume. The outlet does not give thresholds for those additional tests, so the number of providers that would fall under ESMA's direct remit is unresolved.

Commissioner Maria Luís Albuquerque told ministers that under the compromise "only some providers will be supervised by ESMA" and that the Commission "deeply regrets the proposed compromise," Ledger Insights reported. Her criticism covered several parts of the package, of which crypto was one.

MISP is separate from the Commission's review of MiCA itself, informally known as MiCA 2, on which a consultation closed in August. The Commission's original supervisory proposal came in a package released last December.

Because the Council has agreed only a negotiating position, the split of supervisors is not final. If the position survives, national authorities would keep most CASPs and ESMA would take the significant ones — the largest under the existing test, plus any mid-sized firm that clears the alternative criteria.