EU Watchdog Flags Malta MiCA Licensing Gaps

The European Securities and Markets Authority (ESMA) has scrutinized Malta's Financial Services Authority (MFSA) for its handling of crypto asset service provider (CASP) authorizations under the EU's Markets in Crypto-Assets Regulation (MiCA). ESMA's peer review found that while MFSA has sufficient expertise and supervisory resources, it only partially met expectations, particularly criticizing the approval of an unnamed crypto firm despite unresolved material issues at the time of authorization. This fast-tracked licensing approach, which includes approvals for major exchanges like OKX, Gemini, and Crypto.com, raised concerns about fairness and regulatory thoroughness within the unified MiCA framework. ESMA recommended MFSA reassess pending issues and improve the authorization process to ensure compliance and avoid undermining the consistency MiCA aims to provide across EU member states. The review highlights broader EU concerns about regulatory divergence and the need for coordinated enforcement to maintain trust in the crypto market. Malta’s reputation as a crypto-friendly jurisdiction faces challenges amid these regulatory gaps and ongoing investigations.