EU Seeks Unified Financial Oversight as Nations Push Back

The European Union is moving toward a significant overhaul of its financial regulatory framework, with plans to centralize oversight of stock and cryptocurrency markets under a single authority akin to the U.S. Securities and Exchange Commission (SEC). The proposed reforms aim to address fragmentation across national regulators, reduce compliance costs for cross-border trade, and position Europe as a more competitive global financial hub, according to Cointelegraph.

The European Commission is reportedly drafting legislation to expand the European Securities and Markets Authority's (ESMA) jurisdiction, granting it direct supervision over stock exchanges, crypto trading platforms, and other critical infrastructure, the Coinpaper report said. This shift, backed by ECB President Christine Lagarde, would mirror the U.S. model of a unified regulatory body, enabling ESMA to issue binding decisions in disputes and enforce consistent rules across the 27-nation bloc. Lagarde has emphasized the need for such a framework to mitigate systemic risks from large cross-border firms, stating, "Creating a European SEC... could be the answer" (reported earlier by Cointelegraph).

The proposal aligns with the EU's long-standing goal of establishing a "capital markets union" to streamline access to capital for startups and infrastructure projects. Currently, the fragmented regulatory landscape—where each member state operates its own financial watchdog—creates barriers for firms seeking to expand beyond national borders, as noted in the Coinpaper report. By centralizing oversight, the EU hopes to lower costs for cross-border trade and foster a more integrated market capable of rivaling the U.S. system, according to Coindoo.

The plan also seeks to address enforcement gaps in the Markets in Crypto-Assets Regulation (MiCA) framework, which took effect in December 2024. Under MiCA, crypto firms licensed in one EU country can "passport" their authorization to operate across the bloc. However, France and other member states have raised concerns that this system could incentivize companies to seek licenses in jurisdictions with weaker regulatory standards, as reported by Cointelegraph. In September, France's securities regulator warned it might block passporting rights unless ESMA assumes direct control over major crypto firms, a point also raised by Coindoo. Austria and Italy have similarly advocated for expanded ESMA authority to ensure consistent enforcement of MiCA's rules, according to the Coinpaper report.

The European Commission is expected to publish a draft of the proposal by December, according to sources cited in the Financial Times (reported earlier by Cointelegraph). If adopted, the reform would mark a historic shift, granting ESMA powers comparable to the SEC and signaling the EU's intent to unify its financial markets, as Coindoo has explained. However, the move faces resistance from some member states wary of ceding control over local supervision. ESMA Chair Verena Ross acknowledged these challenges, stating the proposal is designed to reduce "market fragmentation" while balancing regional dynamics, a concern highlighted by Coindoo.

The timing of the reforms reflects growing pressure to compete with the U.S. and other global financial centers. As Washington continues to attract capital with its deep, integrated markets, the EU's push for a centralized regulator underscores its ambition to present a unified alternative, as discussed by Coindoo. Whether the plan succeeds will depend on the bloc's ability to reconcile national interests with its vision of a cohesive financial union.