CASPs Under EU Supervision? ECB Signals a Shift Toward Centralized Oversight

The European Union may significantly reshape the supervisory framework for the crypto-asset market. The European Central Bank clearly indicates that crypto-asset service providers should be subject to supervision at the EU level.

This is one of the key conclusions of a broader analysis on integrating capital markets supervision. In practice, it would mean moving away from the current fragmented national supervision model towards a more centralised approach.

CASPs as Cross-Border Operators in the EU under MiCAR

From a regulatory perspective, activities related to crypto-assets are inherently cross-border. Entities providing such services typically do not limit their operations to a single Member State.

Under the regulatory framework established by MiCAR, crypto-asset service providers, once authorised in one Member State can provide services across the entire European Union.

In practice, this means that:

• a significant number of entities plan operations in multiple Member States,
• many aim to operate on a pan-European scale,
• the scale of activity exceeds the capacity of purely national supervision.

As a result, the competent authority granting authorisation does not have a complete overview of the entity’s activities, making it more difficult to identify systemic risks.

Building a Consistent Crypto Supervision Model in the EU

Unlike other segments of the financial market, crypto-asset regulation has only recently been introduced. According to the ECB, this creates a unique opportunity to design a consistent supervisory framework from the outset.

Centralising supervision over crypto-asset service providers could:

• ensure uniform application of MiCAR across the EU,
• reduce interpretative divergences between national authorities,
• enable the development of specialised supervisory expertise within a single institution.

From a regulatory standpoint, this approach could help avoid the fragmentation issues seen in other sectors.

ESMA as Central EU Supervisor of Crypto Assets

The analysis identifies the European Securities and Markets Authority as the natural candidate to take on direct supervisory responsibilities.

Such a model would involve:

• concentration of supervisory powers at the EU level,
• harmonised approaches to licensing and supervision,
• consistent enforcement across all market participants.

In the case of crypto-asset service providers, the case for centralisation is particularly strong given their cross-border nature.

Limiting Regulatory Arbitrage in the EU

One of the key consequences of potential reform would be the reduction of regulatory arbitrage between Member States.

Currently, entities applying for authorisation may consider:

• the supervisory approach of the competent authority,
• the level of regulatory strictness,
• the duration and complexity of the licensing process.

Once authorised, they can operate across the EU, effectively exporting supervisory standards from one jurisdiction to others.

Centralised supervision could:

• create a level playing field,
• reduce incentives for supervisory competition,
• increase regulatory predictability.

Higher Compliance Expectations for Crypto-Asset Providers

For crypto-asset service providers, centralised supervision would likely translate into more consistent but also more demanding regulatory standards.

In particular, this may include:

• expanded reporting obligations,
• increased granularity of submitted data,
• harmonised approaches to risk management and compliance functions.

A central supervisor with a full market overview would be better positioned to identify inconsistencies and systemic risks.

Crypto Assets as a Catalyst for EU Financial Market Reform

The proposal to place crypto-asset service providers under EU-level supervision may have implications beyond this sector.

It could serve as:

• a first step toward deeper supervisory integration,
• a reference model for other segments of capital markets,
• part of a broader strategy to build a truly unified financial market in the EU.

What ECB’s Position Means for the Crypto Market?

For crypto-asset service providers, the ECB’s position signals a shift towards stronger EU-level oversight and a reduced role for national differences.

In practice, this could mean:

• greater predictability for cross-border operations,
• reduced ability to choose jurisdictions based on supervisory practices,
• the need to adapt business models to more uniform regulatory requirements.

At the same time, centralised supervision could enhance trust in the crypto-asset market and support its further institutionalisation.

Stay ahead of upcoming EU crypto regulation changes under MiCAR. Contact us to understand how centralised supervision may impact your business and operations. Prepare your company for new compliance requirements and a more unified regulatory framework in the crypto-asset market.