The Council of the European Union has backed a narrower route to central supervision of crypto firms, agreeing that only the most significant cross-border crypto-asset service providers should move immediately under the European Securities and Markets Authority. The political agreement was announced on 9 October as part of a wider capital-market reform package.
The change concerns who would supervise these businesses. It is still a negotiating position: the Council says the text must be finalised and formally adopted, with talks to follow once the European Parliament has agreed its own position.
How the Council differs from the original proposal
The European Commission's original proposal, COM(2025)943, would transfer supervision of all crypto-asset service providers to ESMA. Its approach to trading venues and post-trading infrastructure was already focused on significant operators with cross-border activity. The Council has now brought a significance test into the immediate transfer of crypto supervision as well.
The Commission's case for central oversight rests on the costs of fragmented supervision. A business operating across national borders can face different supervisory practices even within the single market. The proposal argues that these differences create uncertainty and extra compliance work, making it harder for firms to expand across the EU.
Under the Council's 9 October agreement, ESMA-led teams would combine EU and national expertise during a two-year transition. Cooperation with national supervisors would continue afterwards, while ESMA would retain responsibility for final supervisory assessments and decisions. The announcement does not provide a list of crypto firms that would qualify.
The existing crypto rulebook remains the starting point
The EU already has a dedicated legal framework, the Markets in Crypto-Assets Regulation, usually called MiCA. The Commission's overview of that framework says it covers crypto assets and related services that fall outside other EU financial-services legislation. That boundary matters because digital assets do not all belong to the same regulatory category. The Commission defines a crypto asset as a digital representation of value or a right that can be stored or transferred electronically.
MiCA addresses the information supplied to prospective customers, as well as organisational, operational and prudential requirements for providers such as trading venues and wallet businesses. Its protections also cover market abuse and technology risks. Changing the supervisory authority is therefore a question about administering an existing system of obligations.
Anti-money-laundering duties sit alongside those requirements. The Commission says providers covered by MiCA must also comply with the EU framework against money laundering and terrorist financing. The supervision debate does not turn a regulated service into a guarantee against losses or remove the need for controls on financial crime.
Why the crypto change is in a broader market package
The Council's explanation of the market integration and supervision package sets out three legislative proposals. They cover capital-market integration, changes to financial-market and asset-management rules, and a new regulation on settlement finality. Crypto supervision is one part of this wider effort to make cross-border finance work more consistently.
Post-trading is another part of the package. It covers what happens after an asset is bought or sold, including clearing and settlement. The Council wants fewer barriers between those services and better connections between market infrastructures, alongside more consistent supervision of firms operating across national boundaries.
The Commission's original text also seeks to remove obstacles to distributed ledger technology and tokenised financial instruments. It proposes changes both to the DLT pilot regime and to the ordinary rulebook. The stated aim is to let technology-based services grow while retaining safeguards against the risks associated with their use.
The Council's policy summary says its approach would broaden activity permitted within the DLT pilot regime and create a full-time ESMA executive board. It would also leave a proposed cross-border depositary passport optional for member states. Those choices show the package still contains country-level discretion alongside central oversight.
Dalimss News has separately covered the US proposal on crypto custody for advisers and funds and the CFTC consultation on leveraged crypto trading. Each concerns a different regulatory process; none is a substitute for the European legislative steps still ahead.
The next steps are finalisation of the Council text and Parliament's position. No transfer of supervision was announced as already in force.
