The Bank of France has urged the European Union to grant its markets regulator direct oversight of major crypto firms, warning that fragmented supervision could undermine the bloc’s financial sovereignty.
Speaking at the ACPR-AMF Fintech Forum in Paris on Thursday, Bank of France Governor François Villeroy de Galhau proposed that the European Securities and Markets Authority (ESMA) be empowered to directly supervise crypto-asset issuers under the EU’s Markets in Crypto-Assets (MiCA) framework.
“I also advocate, alongside the president of the AMF, for European supervision of crypto-asset issuers by ESMA,” he said, emphasizing that it would ensure consistent rule enforcement and mitigate risks.
Villeroy de Galhau cautioned that leaving oversight to national regulators could create uneven enforcement across the EU, particularly as crypto firms expand rapidly throughout the region.
Stablecoins and the EU’s monetary sovereignty
He argued that direct oversight by the Paris-based ESMA would prevent regulatory arbitrage and ensure that major players are held to uniform standards, regardless of where they operate.
“The implementation of MiCA is a decisive step forward,” he said. “But its effectiveness depends on a more unified approach to protect European investors and maintain a level playing field.”
Villeroy de Galhau also highlighted the growing risk posed by dollar-backed stablecoins, noting that MiCA currently allows multiple issuances of the same stablecoin, which he described as a regulatory weakness. Under this model, firms can issue tokens both inside and outside the EU while maintaining only partial reserves.
He warned that stablecoins could weaken the euro and trigger a proliferation of private settlement solutions, increasing the EU’s reliance on unregulated, non-European entities.
Other officials have raised similar concerns. On September 19, Bank of Italy Deputy Governor Chiara Scotti said that multi-issuance stablecoins could threaten financial stability and should face restrictions, despite their potential benefits for liquidity and scalability.
The European Systemic Risk Board (ESRB), responsible for monitoring systemic risks in the EU, has also criticized multi-issuance stablecoins. On October 1, it recommended banning the practice both within the bloc and in foreign jurisdictions. While non-binding, the recommendation adds pressure on EU policymakers to tighten stablecoin regulations.
Toward stricter oversight
Villeroy de Galhau concluded that the solution lies in completing and strengthening the European regulatory framework to reduce arbitrage risks and safeguard financial stability.
“This framework would benefit from much stricter regulation of the multi-issuance of the same stablecoin from inside and outside the European Union, to reduce arbitrage risks in times of stress.”
Villeroy de Galhau’s remarks come as the European Commission is preparing to shift oversight of financial sectors, including crypto, from national regulators to ESMA.
On Monday, ESMA Chair Verena Ross said the reform aims to create a more integrated and globally competitive financial landscape for the EU.
Passporting challenges drive calls for unified supervision
Under the EU’s MiCA framework, licensed crypto firms can use a mechanism called passporting, which allows them to obtain authorization in one member state and have that license recognized across the entire EU.
The feature is intended to establish a single market for crypto providers, reducing barriers to entry and avoiding duplicate licensing applications.
However, while passporting is meant to streamline market access, it can expose weaknesses if national regulators do not fully meet their supervisory obligations.
In July, ESMA criticized Malta’s licensing process after discovering that the country’s financial watchdog only partially fulfilled requirements when approving a crypto firm. This raised concerns that weak oversight in one member state could have ripple effects across the EU.
On September 15, France’s securities regulator, the Autorité des Marchés Financiers (AMF), echoed these concerns, highlighting enforcement gaps under the MiCA framework. The regulator indicated it might consider limiting the validity of the passporting system if such gaps persist.
