ESMA seeks stronger crypto enforcement powers in EU MiCA review

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ESMA seeks stronger crypto enforcement in EU

Highlights

ESMA proposes that regulators gain powers to freeze crypto assets suspected of links to financial crime, money-laundering, or terrorist financing under MiCA.
National regulators could be authorized to take down websites of scams or unauthorized crypto firms, addressing delays that allow suspicious assets to disappear.
ESMA recommends banning misleading crypto marketing, introducing third-party marketing rules, and granting powers to act against non-EU firms soliciting EU investors without authorization.

Proposals in the MiCA review

As reported by Reuters, the European Securities and Markets Authority said on Wednesday that national regulators and ESMA need broader powers to enforce the EU's crypto regime more effectively. The watchdog says these powers should include the ability to require crypto companies to freeze assets when there are reasonable grounds to suspect links to financial crime, money-laundering or terrorist financing.

ESMA says national supervisors, which are responsible for enforcing MiCA, could also be given authority to remove websites linked to scams or unauthorized crypto firms. It adds that current procedures are often too slow, meaning suspicious crypto assets can disappear before a freeze is carried out.

The watchdog also proposes banning certain misleading crypto marketing techniques and introducing rules for third-party marketing. It further says crypto companies should be required to provide customers with full cost information.

Regulatory impact across the EU market

ESMA says country-level regulators should receive specific powers to act against crypto companies based outside the EU that actively solicit investors in the bloc without authorization. The proposals form part of its response to a consultation on MiCA, which is now under review.

The push highlights wider concern within European supervision about regulatory divergence and patchy enforcement of the crypto rules. A group of central banks in Europe also published its response to the MiCA consultation last week, underscoring growing scrutiny of how the framework is applied across the region.

In our earlier article on stablecoin market growth, we noted that stablecoins were expanding rapidly even as trading in major cryptocurrencies softened, with on-chain adoption led by issuers such as Tether and Circle. We also highlighted that tightening rules on reserves and capital for stablecoin issuers could reshape competition and raise compliance expectations as stablecoins become more embedded in payments and settlement infrastructure.

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