EU crypto supervision - what will change in the law?

A revolution in European crypto-asset supervision - what is the dispute about?

The cryptocurrency market in the European Union is entering a phase of unprecedented regulatory change. The European Commission has proposed centralising the supervision of crypto-asset service providers, transferring the main supervisory powers to the European Securities and Markets Authority (ESMA), based in Paris. The proposal is a key element in building the so-called Savings and Investments Union, which aims to direct trillions of euros of European citizens' private savings towards investments that support economic growth.

Meanwhile, the governments of the Member States are voicing firm opposition to such far-reaching centralisation. An official note prepared by the government of Cyprus, which currently holds the rotating presidency of the Council of the European Union, indicates that most European capitals prefer a selective model. This would mean that direct EU supervision would cover only the largest players on the market, while smaller crypto service providers would remain under the jurisdiction of national financial supervisory authorities.

For individual investors, entrepreneurs operating in the fintech sector and financial institutions, this dispute is of fundamental importance. The final shape of the regulation will determine not only the rules for conducting business, but also the level of legal protection for crypto-asset market participants across Europe.

Arguments for and against centralisation - the positions of the Member States

The debate among the Member States' finance ministers has revealed deep divisions over the future supervisory model. The European Commission argues that crypto services are by their nature cross-border, which justifies building supervisory powers at the central level. In Brussels' view, only uniform supervision can effectively prevent threats to financial stability at an early stage.

Opponents of centralisation, among whom Ireland and Luxembourg are particularly active, raise several significant concerns. First, they fear losing regulatory influence to the authority in Paris. Second, they point to the considerable administrative costs of implementing the new model. Third, they argue that local supervisory authorities have a better understanding of their own markets and are able to respond to irregularities more quickly.

The key points of contention in the negotiations include:

• Qualifying threshold - the scale of activity at which an entity should be supervised by ESMA rather than by national authorities
• Allocation of supervision costs - who will bear the financial burden of the new supervisory structure
• Intervention powers - the scope of ESMA's powers to act directly against national entities
• Resolution mechanism - the rules for handling crisis situations involving supervised entities
• Retail investor protection - minimum information and procedural standards applicable across the EU

Many analysts stress that excessive bureaucracy may stifle innovation in the blockchain technology sector in Europe, which would weaken the competitiveness of the EU market against the rapidly developing ecosystems in the United States and Asia.

Eurozone financial stability and the growing role of crypto-assets

Concerns about eurozone financial stability have taken on particular significance following the publication of a report by the European Central Bank. The document pointed to the growing exposure of European banks to the crypto ecosystem. Although the current level of risk is assessed as limited, the pace of growth of the digital asset market suggests that this threat may soon become critical for the security of the entire financial system.

From a legal perspective, preventing regulatory arbitrage remains a fundamental challenge. This phenomenon occurs when crypto firms deliberately choose jurisdictions with the lowest standards of oversight, which allows them to avoid the stricter requirements in force in other Member States. The European Commission rightly points out that uniform supervisory rules are necessary to eliminate such practices and ensure a level playing field across the entire EU internal market.

At the same time, Brussels is seeking to build trust in new forms of digital capital, which is meant to help Europe compete effectively with markets such as the US and China. Investors are closely following the negotiations, because any change in the way supervision is organised may directly affect the liquidity, valuation and availability of digital assets on the European market. The decisions taken in the coming weeks will shape the legal framework in which the crypto sector will operate for years to come.

Legal consequences for Polish entrepreneurs and investors

For Polish entities operating in the crypto-asset market, the upcoming regulatory changes bring a number of significant legal and organisational consequences. Regardless of the final shape of the compromise reached at EU level, entrepreneurs should already be preparing for tighter regulatory requirements.

In practice, this means taking several key actions. First, firms providing crypto-related services should carry out a compliance audit of their business against the current provisions of the MiCA (Markets in Crypto-Assets) Regulation, which forms the foundation of European crypto regulation. Second, individual investors must be aware that the new supervisory rules may affect the availability of certain crypto services and products on the Polish market.

Particular attention should be paid to information and reporting obligations, which are likely to be extended both to service providers and to investors holding significant digital asset portfolios. Polish law firms specialising in financial markets law report growing client interest in regulatory compliance in the crypto area.

How to prepare for the new rules? Legal support for market participants

The rapidly changing regulatory environment of the crypto-asset market requires its participants to take a proactive approach to managing legal risk. Entrepreneurs who adapt their business to the upcoming requirements in good time will gain a significant competitive advantage and avoid potentially severe administrative sanctions.

The key areas requiring legal analysis include the corporate structure of crypto service providers, AML/KYC (anti-money laundering) policies, rules for safekeeping client assets and complaint-handling procedures. It is worth stressing that both the MiCA Regulation and the planned changes to the supervisory structure provide for substantial financial penalties for breaches of the rules.

Whether you run a crypto exchange, offer digital wallet services or invest privately in digital assets, professional legal advice is today not a luxury but a necessity. Our firm has many years of experience providing legal services to entities operating at the intersection of traditional finance and blockchain technology.

Contact us today to discuss your legal situation and prepare for the upcoming regulatory changes. Our specialists will help you identify risks, develop a compliance strategy and protect your interests in the new legal environment of the European crypto-asset market.