ESMA Seeks Stronger Powers for EU Crypto Enforcement

ESMA announced on Wednesday a call for stronger authority to police crypto markets. European regulators should be empowered to enforce crypto rules more effectively, including giving ESMA and national authorities the power to order crypto companies to freeze or sequester assets when there are reasonable grounds to suspect links to financial crime, money laundering, or terrorist financing. National regulators already enforcing the EU’s MiCA framework could also gain powers to remove scam or unauthorized crypto websites outright.

Why Current Procedures Fall Short

Current asset freezing procedures are proving too slow, ESMA stated. The watchdog noted that suspicious crypto assets linked to criminal activities often disappear before action can be taken, a direct result of lengthy existing processes. The delays hinder the fight against illicit financial flows in the digital asset space, and ESMA emphasized that swift intervention is crucial to prevent assets from vanishing before investigators can recover funds tied to serious crimes.

The proposals go beyond freezing powers. ESMA also wants to address several related gaps:

• Banning misleading crypto marketing techniques, including unregulated influencer promotions
• Giving country level regulators specific powers to combat non-EU crypto companies soliciting EU investors without authorization
• Requiring crypto companies to provide full cost transparency for their services

Part of a Larger MiCA Review

These proposals form part of ESMA’s response to an ongoing consultation on the Markets in Crypto Assets (MiCA) regulation, which is currently under review. A group of European central banks published their own response to the same consultation last week. Concerns persist among some regulators about potential regulatory divergence and patchy enforcement of MiCA rules across the bloc, underscoring the push for a more unified approach.

The outcome of the MiCA consultation will determine the future scope and effectiveness of EU crypto regulation going forward.

Hashlytics Take

The headline here isn’t that regulators want more power, that’s always true. It’s that ESMA is explicitly naming the mechanism criminals exploit: the gap between suspicion and action. Assets move in seconds on-chain, while freeze orders in the EU can take days or weeks to process through existing channels. That asymmetry is the actual story, not the general push for oversight. If MiCA’s review grants ESMA this freeze authority, it would close one of the more exploitable seams in European crypto enforcement rather than just adding another layer of paperwork.