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Key Insights France has warned it could block crypto firms licensed in other EU states from operating locally, citing uneven enforcement under MiCA rules. France, Italy, and Austria are pushing for the European Securities and Markets Authority (ESMA) to directly supervise major crypto firms. PARIS - (MarketsXplora) France has warned it may try to block some cryptocurrency companies from operating domestically if they are licensed in other European Union countries, raising alarm over enforcement gaps in the bloc’s landmark digital asset regime. The French securities regulator, Autorité des Marchés Financiers (AMF), told Reuters on Monday it is concerned that under the Markets in Crypto-Assets Regulation (MiCA), companies may be exploiting differences in how national regulators apply the rules. “We do not exclude the possibility of refusing the EU passport,” AMF chair Marie-Anne Barbat-Layani said, describing the potential step as legally complex and comparable to an “atomic weapon” for the single market. AMF chair Marie-Anne Barbat-Layani MiCA, which came into force for crypto-asset service providers in December 2024, allows firms licensed in one EU country to use that authorization to operate across the 27-nation bloc. The framework was designed to harmonize rules, but regulators say it is already exposing inconsistencies. Barbat-Layani warned that crypto platforms are “doing their regulatory shopping all over Europe, trying to find a weak link that will give them a licence with fewer requirements than the others.” France, Italy, Austria Call for ESMA to Step In On Monday, France joined Austria and Italy in calling for the European Securities and Markets Authority (ESMA), based in Paris, to take over direct supervision of major crypto companies. The three regulators argued in a joint position paper that the first months of MiCA’s application have revealed “major differences” in how markets are being overseen by national authorities. They urged EU lawmakers to establish a mechanism to transfer supervisory powers to ESMA and backed revisions to MiCA, including stricter rules on crypto activities outside the bloc, stronger cybersecurity oversight, and a review of how new token offerings are regulated. Direct European supervision, they said, would better protect investors and help avoid a regulatory race to the bottom. A spokesperson for ESMA said the regulator would continue “working intensely” to ensure consistent authorisation and oversight, adding that ESMA had already encouraged lawmakers to consider pan-EU supervision in a paper last year. Spotlight on Malta’s Licensing Regime The debate comes amid mounting criticism of Malta’s crypto licensing framework. In July, ESMA published a peer review of the Malta Financial Services Authority (MFSA)’s authorization of a crypto provider, finding the watchdog only “partially met expectations.” The ESMA’s ad hoc Peer Review Committee recommended that Malta reassess pending issues from the authorization stage and adapt supervisory practices as the number of applications grows. Earlier this year, Malta’s regulator also faced scrutiny when ESMA concluded it had not done enough to assess risk in granting a licence to one unnamed company. Despite the criticism, Malta defended its record, calling itself an “early adopter” of digital asset regulation. Meanwhile, other jurisdictions have been moving forward: Luxembourg recently granted a MiCA licence to U.S.-listed exchange Coinbase, while Malta licensed Gemini, the exchange founded by Tyler and Cameron Winklevoss.

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