The Council of the European Union reached political agreement on October 9, 2025, to transfer direct supervisory authority over major crypto-asset service providers from national regulators to the European Securities and Markets Authority (ESMA), reshaping oversight under the Markets in Crypto-Assets Regulation (MiCA).
The proposal targets an estimated 10 to 15 providers across the EU’s 360 total crypto-asset service providers. ESMA would assume direct oversight of firms meeting significance thresholds: 15 million active EU users, 1 million active users, €1 billion in crypto assets under custody, €4 billion in annual client transactions, or five additional criteria not yet specified by the Council.
MiCA’s existing passporting system allows “a provider authorized in one member state to offer approved services elsewhere in the EU without establishing a physical presence in every country it serves,” while remaining supervised primarily by their home-country regulator. The Council’s proposal centralizes oversight of the largest players to address regulatory gaps identified in a July 2025 ESMA review.
The ESMA Review and Malta’s Opposition
That July review examined Malta Financial Services Authority’s authorization of an unnamed crypto provider and found insufficient evidence addressing governance, conflicts of interest, technology infrastructure, custody arrangements, and anti-money-laundering risks. Malta opposed the transfer to ESMA in September 2025, arguing that MiCA was too new to justify additional regulatory layers and warning that centralization could introduce bureaucracy and hamper competitiveness.
The Council’s agreement narrows the European Commission’s original proposal to move all crypto service providers under ESMA supervision. The compromise reflects tension between regulatory tightening and Malta’s concern that early centralization could disadvantage EU crypto firms.
ESMA Powers and Transition
Under the proposal, ESMA would gain authority to request information, conduct inspections, investigate breaches, impose financial penalties, restrict services, and withdraw authorization. National regulators would continue participating in broader policy and supervisory coordination.
The agreement envisions a two-year transition period. Existing MiCA licenses for companies brought under direct ESMA supervision would remain valid during this window. The proposed ESMA executive board would include five independent members.
Next Steps
The Council’s political agreement establishes its negotiating position. The Council must still negotiate with the European Parliament before the proposal can be implemented across all 27 EU member states. No formal adoption date has been announced.
