Bank of France Seeks Unified EU Crypto Oversight by ESMA

• The Bank of France urges ESMA-led crypto oversight to prevent fragmented EU supervision.
• Villeroy warns dollar-backed stablecoins could undermine euro and EU monetary sovereignty.
• Unified regulation under ESMA is seen as crucial for investor protection and market stability.

France urges unified EU crypto supervision under ESMA

The Bank of France seeks the European Securities and Markets Authority (ESMA) to have direct crypto oversight by the European Union. Governor Francois Villeroy de Galhau, speaking at the ACPR-AMF Fintech Forum in Paris, said the single system is crucial to financial sovereignty.

He cautioned that national regulators do not enforce regulations on the growing crypto companies in Europe uniformly. In his opinion, the ESMA control would prevent regulatory arbitrage and establish a just market of all parties. He said that the adoption of MiCA was a decisive move. However, it should have a coherent strategy to save investors. His statements are based on EU proposals to transfer additional financial oversight to ESMA. Chairwoman of the ESMA Verena Ross remarked that the reform should create a better and more competitive European market.

Stablecoin risks spark calls for tighter MiCA regulation

Villeroy de Galhau also expressed that the monetary independence of the EU would be threatened by dollar-backed stablecoins. According to him, there are critical loopholes in the rules of MiCA on the concept of multi-issuance, which permits the same stablecoin to be issued both within and outside the EU. These, he said, undermine the euro and increase the sensitivity of Europe to non-European issuers.

He was accompanied by the Bank of Italy Deputy Governor Chiara Scotti who also recommended more restrictive stablecoin limits. Recently, the European Systemic Risk Board supported the prohibition of multi-issuance in order to lessen financial instability.

The passporting regulation of MiCA allows licensed crypto companies to conduct business in any country of the EU upon approval. However, a laxity in enforcement is a weakness of the system. ESMA previously criticised the process of licensing in Malta because it lacked certain important expectations. Poor national supervision was also expressed by the regulator in France, the Autorité des Marchés Financiers (AMF).

Villeroy de Galhau claimed that Europe needed to consolidate its financial and technological sovereignty by consolidating control. He reiterated the promise by the Bank of France to collaborate with ESMA and tighten the stablecoin regulation to achieve financial stability.