The European Commission is set to propose re-centralizing aspects of the European Union’s digital asset supervisory regime, according to a report from the Financial Times.
Under the proposals, the EU would have a ‘single supervisor’ akin to the United States’ Securities and Exchange Commission (SEC), which would be able to issue binding decisions in the cases of dispute between national regulators currently empowered under the EU’s.
The “single supervisor,” potentially the pre-existing European Securities and Markets Authority (ESMA), would take on oversight of key financial markets infrastructure, including stock exchanges, crypto exchanges, and clearing houses. It would also be given the ‘final say’ over disputes involving large asset managers and national regulators.
The proposals are expected to be submitted in December as part of a “markets integration package.” The exact contents of the proposals, however, are still up in the air. This is particularly so considering the competing views within the EU about precisely what should and should not be centralized.
The envisioned centralization would make for a significantly different environment than that in place when the EU’s Markets in Cryptoassets Regulation (MiCA), the EU’s comprehensive legal framework for digital assets, was put in place. Under MiCA, national regulators are left with discretion as to how they implement the broad directives of MiCA.
In particular, national regulators retain responsibility for issuing licenses to virtual asset service providers (VASPs), such as exchanges. Under MiCA, a company which gains license approval in one EU country would be compliant to operate throughout the entire Union.
Some EU countries, including France, have complained that some national regulators are granting licenses without sufficient scrutiny, leading to what Marie-Anne Barbat-Layani, president of France’s financial services regulator (AMF), called a “race to the bottom” among regulators trying to lure in digital asset business.
Alarmingly for the EU, Barbat-Layani also raised the possibility of French authorities refusing to honor the passporting envisioned under MiCA.
France, Italy, and Austria have already called for the EU to transfer supervisory powers over digital assets to ESMA, though they’ve faced opposition from elsewhere in the EU, including from Luxembourg.
The FT report also cites Germany’s historic reluctance to cede regulatory power to Brussels, though it notes that Germany has recently signaled openness to working with France on potential compromises. However, this reportedly does not extend to handing supervision of digital asset exchanges to ESMA.
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Source: https://coingeek.com/eu-considers-recentralizing-digital-asset-supervision-in-brussels/
