TLDRThe European Commission seeks to centralize crypto regulation under ESMA.The proposal aims to address security risks and money laundering in the crypto sector.ESMA would gain direct oversight of all crypto service providers across the EU.France, Austria, and Italy support the proposal for stronger oversight on large exchanges.The proposal remains in draft form and requires approval from the European Parliament and Council.The European Commission has put forward a proposal to centralize cryptocurrency regulation, placing significant oversight under the European Securities and Markets Authority (ESMA). This move aims to enhance control over major crypto exchanges and address growing concerns over security risks and money laundering. The proposal seeks to tighten oversight within the European Union (EU), affecting how large crypto service providers operate across member states.Expanding ESMA’s RoleCurrently, crypto firms in the EU can operate by registering in just one country, allowing them to offer services across the entire bloc. This structure, which is part of the Markets in Cryptoassets (MiCA) rules, means that national regulators are primarily responsible for overseeing local market activities. However, the European Commission’s draft proposal would grant ESMA direct supervisory powers over all crypto service providers in the EU, including exchanges like OKX, which has already secured a MiCA license.The push for a more centralized system largely stems from concerns within France’s regulatory body. Recent incidents, such as the 2025 Bybit hack, have highlighted vulnerabilities, particularly in exchanges with substantial international operations. With some exchanges now holding a MiCA license in the EU, their global operations still expose the region to risks, raising alarms about investor protection and market stability.Support and Concerns from Member StatesSeveral European Union countries, including France, Austria, and Italy, have supported the proposal, particularly in terms of overseeing larger crypto exchanges. However, the draft remains in its early stages and is still awaiting approval by both the European Parliament and the Council of Member States. Some countries argue that keeping regulation at the national level for smaller businesses could allow for more detailed oversight.If passed, the proposal could create new layers of compliance for major crypto firms. Industry experts, including Robert Kopitsch from Blockchain for Europe, have warned that extending ESMA’s oversight could introduce legal uncertainties. While national regulators have closer relationships with companies, ESMA’s broader, cross-border scope may result in less granular monitoring of crypto activities. As the draft proposal awaits further approval, the European Commission’s move could reshape how cryptocurrency operates within the EU.The post European Commission Proposes Centralized Crypto Oversight by ESMA appeared first on Blockonomi.