EU Plans ESMA Oversight as Stablecoin Risks Rise

The European Commission is preparing rules to transfer supervision of stock exchanges, crypto firms and clearing houses from national regulators to the European Securities and Markets Authority (ESMA) to create a more integrated, globally competitive EU capital market and reduce duplication under MiCA. ESMA chair Verena Ross has endorsed the move, though it has drawn pushback from smaller financial centres such as Malta, Ireland and Luxembourg; proponents say centralising oversight would concentrate scarce expertise and streamline cross‑border licensing, while critics fear loss of national control. Separately, the European Systemic Risk Board (ESRB), chaired by ECB president Christine Lagarde, warned that “third‑country multi‑issuer” stablecoin schemes fungible across the EU and non‑EU jurisdictions carry built‑in vulnerabilities and recommended urgent policy action, including possible bans, to avoid systemic shocks. The ESRB highlighted liquidity and reserve mismatches that could force ECB intervention and noted the stablecoin market tops $300 billion and is dominated by dollar‑pegged tokens (Tether’s USDT >58%); global bodies including the BIS have raised similar concerns and private analysis from Standard Chartered warned stablecoins could drain up to $1 trillion from emerging‑market bank deposits. Together these developments are driving coordinated regulatory tightening across the EU and internationally to address supervisory fragmentation and the systemic risks posed by large, cross‑border stablecoin arrangements.