EU Aims for Coordinated Financial Regulation Amid Resistance from Member States

The European Union is preparing for a major transformation of its financial regulatory system, aiming to consolidate the supervision of both stock and cryptocurrency markets under a single authority similar to the U.S. Securities and Exchange Commission (SEC). These planned changes are intended to resolve the current fragmentation among national regulators, lower the costs associated with cross-border transactions, and enhance Europe's standing as a leading global financial center, according to

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Reports indicate that the European Commission is in the process of drafting new laws that would broaden the European Securities and Markets Authority's (ESMA) powers, giving it direct oversight of stock markets, crypto exchanges, and other essential financial infrastructure,

stated. Supported by ECB President Christine Lagarde, this approach would emulate the U.S. model by establishing a unified regulatory body, allowing ESMA to make binding rulings in disputes and apply uniform regulations throughout the 27 EU countries. Lagarde has highlighted the importance of such a system to address systemic threats from large multinational firms, remarking, "Creating a European SEC... could be the answer" (as previously reported by Cointelegraph).

This initiative supports the EU's ongoing objective of building a "capital markets union" to make it easier for startups and infrastructure projects to access funding. At present, the existence of separate financial regulators in each member state creates obstacles for businesses looking to operate across borders, as highlighted in the Coinpaper report. By unifying regulatory oversight, the EU aims to cut cross-border trading expenses and develop a more cohesive market that can compete with the U.S., according to

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The proposal also intends to close enforcement loopholes in the Markets in Crypto-Assets Regulation (MiCA), which became effective in December 2024. MiCA allows crypto companies licensed in one EU nation to extend their authorization throughout the bloc. However, France and other countries have expressed concerns that this could prompt firms to seek licenses in regions with less stringent oversight, as reported by Cointelegraph. In September, France's financial regulator indicated it might restrict passporting rights unless ESMA is given direct authority over major crypto companies, a concern also noted by Coindoo. Austria and Italy have likewise called for broader ESMA powers to guarantee consistent application of MiCA regulations, according to the Coinpaper report.

The European Commission is anticipated to release a draft of the proposal by December, sources told the Financial Times (as previously reported by Cointelegraph). Should the reform be approved, it would represent a landmark change, equipping ESMA with powers similar to those of the SEC and demonstrating the EU's commitment to integrating its financial markets, as explained by Coindoo. Nevertheless, some member states are hesitant to relinquish authority over their own regulatory systems. ESMA Chair Verena Ross has recognized these difficulties, noting that the proposal seeks to address "market fragmentation" while respecting regional differences, a point emphasized by Coindoo.

The push for these changes comes amid increasing competition with the U.S. and other major financial hubs. As the U.S. continues to draw investment with its large, unified markets, the EU's effort to establish a centralized regulator highlights its goal of offering a strong, unified alternative, as discussed by Coindoo. The ultimate success of the plan will rely on the EU's ability to balance national priorities with its vision for a unified financial landscape.