France is pushing for the European Union to grant direct oversight of major cryptocurrency firms to the European Securities and Markets Authority (ESMA). Bank of France Governor François Villeroy de Galhau called for tighter control over stablecoins within the EU. This proposal aligns with EU efforts to centralize supervision and strengthen financial stability. Villeroy de Galhau emphasized the need for consistent supervision and enforcement of crypto regulations under the EU’s Markets in Crypto-Assets (MiCA) framework. The current system of allowing companies to obtain licenses from individual member states poses risks of regulatory loopholes and uneven oversight. Stricter regulation of stablecoin issuance both within and outside the EU is recommended to reduce arbitrage risks during times of stress. The European Central Bank is gaining support for restricting cross-border stablecoin issuance, potentially conflicting with issuers like Circle and Paxos. Circle, issuer of USDC, utilizes a model that manages both EU-based and overseas tokens. Stablecoins are essential to digital finance but require adequate backing to mitigate systemic risks. MiCA mandates that licensed issuers hold reserves in at least one EU country while simultaneously issuing equivalent tokens abroad, a structure France believes needs stricter supervision to safeguard financial stability and prevent market fragmentation. The European Commission is preparing sweeping changes that could give the ESMA direct supervisory authority over stock exchanges, cryptocurrency firms, and clearing houses to create a more unified capital market in Europe. ESMA Chair Verena Ross highlighted the importance of integrating and globally competing capital markets in Europe. Proposed changes would shift regulation of several financial market sectors currently overseen by national authorities to ESMA. ESMA raised concerns about Malta’s crypto licensing process, noting that while the Malta Financial Services Authority has adequate staffing and sector expertise, it only partially met expectations in authorizing a crypto asset service provider during a peer review. The review focused on the MFSA’s supervisory setup, authorization procedures, and oversight tools to ensure consistency across EU member states under the MiCA regulatory framework.

Read more at Yahoo Finance: France Calls on EU to Give ESMA Direct Oversight of Major Crypto Firms