Key Highlights
- Malta, known as the ‘Blockchain Island,’ is pushing back against the EU’s plan to centralize crypto oversight under ESMA.
- The proposal could shift control of major licensed exchanges away from Malta’s regulator.
- The clash is intensifying ahead of a key EU decision expected later this year.
The EU’s smallest member state is not going quietly. Malta has been openly pushing back against the European Commission’s proposal to centralize crypto supervision under the European Securities and Markets Authority (ESMA), and as the debate heats up ahead of a potential summer vote, the stakes have never been higher for the island nation that built its identity around digital assets.
According to a Bloomberg report, Malta has been railing against the plan for months now, making it clear that it has no intention of quietly ceding regulatory control over the crypto firms it worked hard to attract.
If the European Council and Parliament back the proposal, Malta would lose direct oversight of major crypto firms licensed on its soil, including Crypto.com, Gemini, and Bitpanda. All three secured their MiCA licenses through Malta’s Financial Services Authority (MFSA) and currently operate across the EU through passporting rights that come with that license.
Malta’s crypto licensing track record is at the center of the fight
Malta earned the “Blockchain Island” tag back in 2018, when it became one of the first countries in the world to pass a dedicated regulatory framework for crypto and blockchain through the Virtual Financial Assets Act (VFA Act). That early move gave the MFSA years of hands-on experience with crypto licensing long before MiCA was even a concept.
When MiCA came into full effect in December 2024, Malta was ready. It was among the first EU member states to start issuing Crypto Asset Service Provider (CASP) licenses under the new framework. Within weeks, OKX and Crypto.com had their MiCA approvals from Malta. By mid-2025, Gemini joined that list as the fifth CASP licensed by the MFSA, alongside Bitpanda and ZBX.
But that speed raised eyebrows.
ESMA’s peer review put Malta under the microscope
In July 2025, ESMA published a peer review of the MFSA’s crypto licensing process and found that Malta only “partially met expectations” in how it authorized at least one unnamed CASP. The review flagged unresolved governance, ICT, and anti-money laundering concerns that ESMA said should have been addressed before the license was granted, not left for post-licensing supervision.
Malta pushed back. The MFSA said no license was at risk of revocation and that ESMA’s own report acknowledged the authority’s deep expertise and sufficient staffing. MFSA CEO Kenneth Farrugia said the review should give confidence to firms considering Malta as a licensing jurisdiction, not undermine it.
That tension set the stage for the broader fight happening now.
France, Italy, and Austria want ESMA to take the wheel
France, Italy, and Austria have been among the loudest voices calling for ESMA to take direct supervisory control of major crypto firms. Their argument is simple: if all 27 EU member states are enforcing the same MiCA rulebook but doing it differently, the entire framework loses credibility.
France’s financial regulator, the AMF, has been particularly vocal. It has suggested it might challenge crypto licenses issued by other EU countries if it believes the standards applied were insufficient. French regulators have also warned against what they see as a “fast-food” approach to MiCA approvals, a thinly veiled reference to Malta’s speed.
ESMA Chair Verena Ross acknowledged the problem in late 2025, noting that building out supervision 27 times over, once in each member state, was duplicative and expensive. She has pushed for centralized oversight, saying it would make European capital markets more integrated and globally competitive.
EU Commissioner for Financial Services Maria Luis Albuquerque has backed the idea and confirmed that the European Commission is evaluating a formal proposal to transfer oversight of stock exchanges, crypto platforms, and cross-border entities to ESMA.
Malta, Luxembourg, and Ireland are not buying it
On the other side, Malta, Luxembourg, and Ireland have formed an informal bloc against the centralization push. Malta’s MFSA released a statement calling centralization an “additional layer of bureaucracy” that could hinder efficiency at a time when the EU is trying to enhance competitiveness.
Luxembourg’s financial watchdog chief Claude Marx went further, warning that handing all investment oversight to ESMA would risk creating a regulatory “monster” and an “extremely complex” organization.
Their concern is not just philosophical. Malta, Luxembourg, and Ireland have all built substantial financial services sectors that depend on their ability to attract and regulate firms locally. Centralization under ESMA could strip smaller member states of the competitive advantages they have spent years developing.
How this connects to the bigger picture
This fight does not exist in isolation. The MiCA framework is still in its early days of full enforcement, with the grandfathering period for existing CASPs set to expire on July 1, 2026. As of March 2026, fourteen exchanges have received full CASP authorization under MiCA across the EU, including Binance in France, Kraken and Coinbase in Ireland, Bitstamp in Luxembourg, and OKX in Malta.
OKX recently secured a Payment Institution license in Malta on top of its MiCA approval, further cementing the island as its European base. That came despite a 1.1 million euro fine from Malta’s Financial Intelligence Analysis Unit over past anti-money laundering failures.
Meanwhile, the European crypto lobbying landscape is shifting rapidly. Exchanges like Kraken, Coinbase, and Bitpanda are among the top spenders trying to shape how MiCA is implemented and whether ESMA ends up with more power or not.
The ECB has also flagged a 48% surge in U.S. stablecoin circulation following the passage of the GENIUS Act last July, prompting calls to centralize stablecoin oversight under ESMA as well.
What happens next
Supporters of the centralization proposal are hoping to advance the process this summer. If the European Council and Parliament greenlight the plan, ESMA would gain direct supervisory authority over the most significant cross-border crypto firms, stripping national regulators like the MFSA of their current role.
For Malta, that would be a direct threat to the ecosystem it has spent nearly a decade building. For firms like Crypto.com, Gemini, and Bitpanda, it would mean answering to a Paris-based regulator instead of a Maltese one with which they already have a working relationship.
Whether the EU sides with the centralization camp or keeps the current model in place will have lasting implications for how crypto is regulated across the bloc and which countries get to call the shots.
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