The Bank of France has called on the EU to give its markets regulator direct supervision of major crypto companies, warning that fragmented oversight could threaten the bloc’s financial sovereignty.
Speaking at the ACPR-AMF Fintech Forum in Paris on Thursday, Banque de France Governor François Villeroy de Galhau said the European Securities and Markets Authority (ESMA) should have a mandate to directly supervise crypto-asset issuers under the EU’s Markets in Crypto-Asset (MiCA).
“I also plead, alongside the president of the AMF, for European supervision of issuers of crypto-assets, exercised by ESMA,” he said, adding that it could guarantee the consistent application of rules and reduce risks.
Villeroy de Galhau said relying on national regulators risks creating uneven enforcement across the EU at a time when crypto companies are growing rapidly in the region.
Bank of France says stablecoins threaten EU monetary sovereignty
He added that direct oversight from Paris-based ESMA would prevent regulatory arbitrage and ensure major players are held to the same standards regardless of where they are based.
“The implementation of MiCA is a breakthrough,” he said. “But its effectiveness requires a more unified approach if we are to protect European investors and maintain a level playing field. »
Villeroy de Galhau also used his speech to talk about the growing threat of dollar-backed stablecoins. He said MiCA’s current authorization for multiple issuance of stablecoins constitutes a regulatory weakness.
Under this framework, companies can issue the same token inside and outside the EU while only retaining partial reserves.
He said stablecoins could weaken the euro and lead to an uncoordinated proliferation of private settlement solutions. This would increase the region’s dependence on non-EU and unregulated entities.
Other officials have echoed their concerns about multi-issue stablecoins. On September 19, Bank of Italy Deputy Governor Chiara Scotti warned that this model could compromise financial stability and should be restricted.
She noted that while multi-issue structures can improve liquidity and scalability, they also create significant legal, operational and stability risks, particularly where issuers are based outside the EU.
The European Systemic Risk Board (ESRB), the EU body responsible for monitoring systemic risks, has also looked into multi-issue stablecoins.
On October 1, the ESRB adopted a recommendation to ban the practice both within the bloc and in other jurisdictions. While not legally binding, the move increases pressure on EU policymakers to more closely regulate stablecoin operations.
Stricter regulations can reduce arbitrage risks
For Villeroy de Galhau, the answer lies in the completion of the European regulatory framework:
“This framework would benefit from much stricter regulation of multiple issuances of the same stablecoin inside and outside the European Union, to reduce arbitrage risks in times of stress.”
Villeroy de Galhau’s comments come as the European Commission develops plans to transfer supervision of financial sectors, including crypto, from national regulators to ESMA.
On Monday, ESMA President Verena Ross said the reform would create a more integrated and globally competitive European landscape.
Related: BoE signals flexibility on stablecoin caps amid industry reluctance: report
Passport issues spark calls for unified supervision
Under the EU MiCA, licensed crypto companies can use a feature known as passporting, which allows them to obtain authorization in one EU member state and benefit from license validity in all member states.
The aim of this feature is to create a single marketplace for cryptocurrency providers, thereby reducing barriers to entry and preventing duplicate applications.
Although the passport system is designed to streamline market access, in practice it risks revealing gaps if national regulators fail to meet their obligations.
In July, ESMA criticized Malta’s licensing process after finding that the country’s financial watchdog only partially met expectations in licensing a crypto company. This has raised concerns that weak surveillance in one country could have a knock-on effect across the EU.
On September 15, the Autorité des marchés financiers (AMF), the French securities regulator, also raised concerns about regulatory enforcement gaps related to the MiCA framework.
The regulator said it may consider denying the validity of the passport function.
Review: EU’s privacy-invading cat control bill delayed – but the fight is not over
