EU Regulators Look to Widen Crypto Supervision Umbrella

This effort is part of a larger push to strengthen the EU’s competitiveness in relation to the U.S. by making sure companies can find funding and scale within Europe without having to go overseas, the Financial Times (FT) reported Sunday (Nov. 2). 

The current landscape, with dozens of national and regional regulators and hundreds of trading and post-trading institutions, raises the costs for cross-border trades, a significant obstacle for startups to scale up in Europe.

According to the report, a single supervisor — modeled on the U.S. Securities and Exchange Commission (SEC) is considered a major step in creating an EU “capital markets union.” The European Commission (EC) has said it will issue proposals next month for a “markets integration package,” the report added.

The plan calls for expanding the powers of the European Securities and Markets Authority (ESMA) to cover “the most significant cross-border entities,” like crypto exchanges, sources familiar with the matter told the FT. 

The report added that while some governments support the move, others like Luxembourg and Ireland contend that it could harm their national financial sector, as they are skeptical that EU regulators would act in the best interests of smaller nations.

“We would like to have [supervisory] convergence rather than creating a costly and ineffective centralized model,” said Gilles Roth, Luxembourg’s finance minister.

In other regulatory news, PYMNTS’ Competition Policy International spoke last week with Andrew C. Glass and Gregory N. Blase, both partners at law firm Nixon Peabody, about the scramble among banks, FinTechs and retailers to stake their claims following the adoption of the GENIUS Act, America’s first stablecoin bill.

“We’ve recently seen a lot of press about how crypto companies, retailers, [and] trustees are all jumping into the marketplace seeking charters from the OCC [Office of the Comptroller of the Currency],” Glass said. “The goal for promoting competition will likely be met.

“Congress wanted to create clarity … and clearly placed regulation of stablecoins within the purview of traditional bank regulators like the FDIC or the OCC,” he said.

“The first difference is the scope of permitted activities,” Blase added. “Congress appears to have wanted to ensure a clear demarcation between regulated banking entities and payment stablecoin issuers.”

Glass noted that the GENIUS Act could streamline the licensing process for FinTechs engaged in money transmitting operations.

“It sets up a possibility for an entity to register under the act and then provide cross-jurisdiction payment processing …  without having to obtain a separate license in every jurisdiction,” he said.