France Seeks Centralized ESMA Control to Curb Regulatory Arbitrage
Governor Warns of Fragmented Supervision
The Bank of France has urged the European Union to give its markets regulator, the European Securities and Markets Authority (ESMA), direct oversight of major crypto-asset firms, warning that fragmented supervision could undermine the bloc’s financial sovereignty.
Speaking at the ACPR-AMF Fintech Forum in Paris on Thursday, Governor François Villeroy de Galhau said crypto issuers should fall under ESMA’s authority as part of the EU’s Markets in Crypto-Assets (MiCA) framework. “I also advocate, along with the president of the AMF, for European supervision of crypto-asset issuers, carried out by ESMA,” he said. “It would ensure consistent application of rules and reduce risks.”
Villeroy de Galhau said relying on national regulators could result in uneven enforcement as crypto firms expand across Europe. He called ESMA’s direct supervision a way to prevent regulatory arbitrage and ensure that major players are held to the identical standards across jurisdictions.
Investor Takeaway
Stablecoin Oversight at the Center of the Debate
Villeroy de Galhau also warned that dollar-backed stablecoins could fragileen the euro’s role in global finance. He described MiCA’s allowance for “multi-issuance” — where companies issue the identical stablecoin both inside and outside the EU — as a flaw that could fragment monetary oversight. “This framework would benefit from much stricter regulation of the multi-issuance of the identical stablecoin from inside and outside the European Union, to reduce arbitrage risks in times of stress,” he said.
He cautioned that multiple issuance channels with partial reserves could create an uncoordinated system of private payment networks, increasing the EU’s dependence on foreign issuers. “The implementation of MiCA is a decisive step forward,” he said. “But its effectiveness requires a more unified approach if we are to protect European investors and maintain a level playing field.”
Other central bankers have raised similar alarms. On Sept. 19, Chiara Scotti, Deputy Governor of the Bank of Italy, said that multi-issuance structures might boost liquidity but also pose legal and operational risks, especially when issuers are based outside the EU. The European Systemic Risk Board (ESRB) followed suit on Oct. 1, recommending a ban on the practice both within the bloc and abroad. While non-binding, the ESRB’s stance adds pressure on lawmakers to close the gap.
Investor Takeaway
Push for Centralized EU Oversight
Villeroy de Galhau’s remarks come as Brussels considers shifting supervision of financial sectors, including crypto, from national agencies to ESMA. The move would streamline oversight and ensure that compliance standards are uniformly applied across member states. Earlier this week, ESMA Chair Verena Ross said the reform would “build a more integrated and globally competitive landscape” for the EU’s financial markets.
Under MiCA, licensed crypto firms can operate across the EU using a passporting mechanism that recognizes authorization from one member state across the entire bloc. While designed to simplify access, the system has exposed fragilenesses in national supervision. In July, ESMA criticized Malta’s regulator for “partial compliance” in approving a crypto firm, warning that fragile oversight in one jurisdiction could ripple across the EU.
France’s markets regulator, the Autorité des Marchés Financiers (AMF), has also voiced concern about inconsistent enforcement. In September, it said it may challenge the validity of MiCA’s passporting feature if gaps persist among national authorities.
Balancing Integration and Sovereignty
The debate reflects the EU’s broader struggle to unify its approach to digital finance while protecting monetary sovereignty. Proponents argue that giving ESMA control over crypto supervision would mirror the centralized oversight already applied to securities markets, while critics say it could dilute national regulators’ authority.
For now, the European Commission’s reform agenda suggests momentum is moving toward centralization. With MiCA due to take full effect in 2025, the question of who enforces it — and how consistently — could determine the strength of the bloc’s emerging crypto market.
