EU Council wants only significant crypto firms supervised by ESMA

The Council of the European Union has reached a compromise on the Market Integration and Supervision Package (MISP), effectively limiting the direct supervisory authority of the European Securities and Markets Authority (ESMA) over crypto-asset service providers (CASPs). While the European Commission originally proposed that ESMA oversee all MiCA-regulated entities, EU finance ministers have restricted this mandate to only those firms deemed "significant." The definition of significance has been adjusted to include firms with over 1 million users, provided they meet additional criteria regarding trading volume or assets under custody. This shift represents a departure from the Commission's initial push for centralized oversight, favoring a more tiered regulatory approach. Commissioner Maria Luís Albuquerque expressed formal regret over the compromise, highlighting ongoing friction between the Commission and member states regarding the centralization of financial supervision. This development is critical for the RWA market as it dictates the regulatory burden and oversight framework for platforms facilitating the issuance and trading of tokenized assets within the EU. By clarifying which entities fall under ESMA's direct purview, the policy provides a clearer, albeit more fragmented, roadmap for institutional compliance in the European digital asset ecosystem.