The European Commission has proposed giving the European Securities and Markets Authority (ESMA) more power and along with it the concern of developing a centralized licensing system is gaining new ground.
On Thursday, the Commission presented a proposal that would make ESMA the “direct supervisory authority” of major segments of the European market infrastructure, including crypto-asset service providers (CASPs), trading venues, and central counterparty clearing houses.
In case the proposal is accepted, the ESMA would be in charge of both supervision and licensing of all European crypto and fintech companies. Faustine Fleuret, director of public affairs at decentralized lending protocol Morpho, warned that such a scenario might lead to prolonged licensing processes and consequently making it difficult for startups to scale.
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However, the proposed law has not yet reached its final stage. It has to be approved first by the European Parliament and the Council, which are negotiating on its terms at present.
EU Pushes to Compete With US Capital Markets
The comprehensive reform proposal aims to allow the Europeans to accumulate more wealth by providing stronger and more competitive among themselves, capital markets of the EU compared to the US ones.
The difference to be seen today is huge. The valuation of the US stock market is about $62 trillion, which is approximately 48% of the total equity market worldwide. On the other hand, the whole EU stock market has a value of about $11 trillion, which is only 9% of the global share, as per Visual Capitalist.
