France Seeks MiCA Oversight to Block EU Crypto Passporting
France’s financial watchdog chief, Marie-Anne Barbat-Layani, has proposed shifting crypto regulation oversight to the European Securities and Markets Authority (ESMA) under the EU’s new MiCA regulation. The plan targets inconsistencies in national licensing and seeks to curb “regulatory shopping.” It may also block the passporting mechanism that lets firms licensed in one member state operate across the bloc.
France, joined by Italy and Austria, argues that uneven enforcement under MiCA regulation risks inadequate supervision of cross-border platforms. The proposal calls for stricter rules on non-EU crypto activities, enhanced cybersecurity standards, and tighter controls on digital asset offerings. Major platforms such as Coinbase (COIN) and Gemini (GEMI) have already secured MiCA licenses in Malta and Luxembourg.
Barbat-Layani warned France could challenge the validity of licenses issued by lenient jurisdictions, using what she calls an “atomic weapon” to enforce compliance. The debate highlights the hurdles of uniform MiCA implementation and the push for cohesive EU-wide crypto oversight.
Bearish
The push by France and its allies to centralize crypto oversight under ESMA signals a tougher regulatory environment. Restricting license passporting could reduce operational flexibility for platforms and heighten compliance costs. Historical events, such as the 2020/2021 MiCA drafting phase, showed that inconsistent enforcement across member states can lead to regulatory arbitrage and market fragmentation, often spooking investors. In the short term, uncertainty around license validity may trigger sell-offs in affected tokens and increase volatility. Over the longer term, however, clearer and harmonized rules could improve market confidence, but the near-term impact is likely bearish as firms adjust to more stringent requirements.