EU Watchdog Flags Malta's Inadequate Crypto Licensing Under MiCA

The European Securities and Markets Authority (ESMA) has raised significant concerns about Malta's approach to licensing crypto companies under the EU’s Markets in Crypto-Assets Regulation (MiCA), which became fully effective in December 2024. A peer review found that Malta’s Financial Services Authority (MFSA) approved a crypto asset service provider (CASP) license despite unresolved material issues and inadequate risk assessment, highlighting governance problems and insufficient pre-licensing scrutiny. While Malta has strong resources and expertise, ESMA criticized the MFSA for granting licenses too quickly without ensuring full compliance with MiCA obligations, urging tighter oversight and more rigorous enforcement during the authorization phase. Malta remains one of the most active issuers of MiCA licenses, with five approved since January 2025, but this rapid authorization process has sparked worries about inconsistent regulatory standards across the EU. ESMA’s review is part of a wider effort to harmonize crypto regulation across member states and to address the evolving risks and opportunities presented by digital finance. Although ESMA cannot directly revoke licenses, its findings are expected to influence stricter regulatory practices across Europe.