Regulators in Austria, France, and Italy are taking a strong stance on the application of the EU’s new MiCA (Markets in Crypto-Assets) regulations, warning that they may take action to block certain crypto firms from operating across borders within the EU. Their concerns focus on inconsistencies in how MiCA is being implemented by different member states, which could lead crypto companies to seek registration in countries with the most lenient oversight, undermining investor safety across the European Union.

MiCA aims to harmonize crypto regulations across the EU, granting a “passport” to crypto service providers (CASPs) licensed in one country so they can operate throughout the union. However, each country is responsible for enforcing these rules, and this decentralized approach enables firms to select jurisdictions that may be more accommodating, potentially creating vulnerabilities within the broader market.

To address these issues, regulators from Italy’s CONSOB, France’s AMF, and Austria’s FMA have called on the European Securities and Markets Authority (ESMA) to directly supervise the largest crypto-asset service providers. They point out that while the European Banking Authority (EBA) already oversees systemic stablecoins, ESMA should have similar authority over major crypto exchanges and platforms that dominate trading volumes in the region.

These concerns have gained greater urgency following a recent peer review by ESMA into Malta’s handling of crypto licensing, which highlighted doubts about the robustness of its authorization process. Malta’s defense aside, its regulatory environment has attracted several large crypto exchanges, adding to the concerns of stricter regulators.

The debate reflects a broader struggle within the EU to balance the benefits of a unified crypto market with the need to protect investors and maintain regulatory standards. As loopholes and discrepancies in implementation emerge, national regulators are prepared to use their powers under MiCA to limit or block firms that they see as a risk, signaling a potentially more fragmented landscape for cross-border crypto operations in Europe.