ESMA's recommendations for the crypto rulebook's review would add freeze powers and target firms that court EU investors without a license.
The European Union's crypto rulebook took effect less than two years ago. Its chief enforcer already wants it widened.
In a response to the European Commission's review of the Markets in Crypto-Assets Regulation, published Sept. 30, the European Securities and Markets Authority set out a list of changes that would extend MiCA into areas it currently leaves alone. The proposals include proportionate requirements for crypto staking, lending and borrowing; a new regulated service category for firms that give customers access to decentralized finance protocols; stricter rules on marketing, including promotion by influencers; and clearer disclosure of costs.
ESMA also asked for binding authority to issue opinions on how tokens should be classified, powers to freeze crypto assets when market abuse or terrorist financing is suspected, and "reinforced supervisory powers to deal with third-country firms which solicit EU investors without being authorised under MiCA."
The offshore clause
That final item carries the most immediate commercial weight. MiCA allows non-EU firms to serve European clients who approach them on their own initiative, a carve-out known as reverse solicitation. Supervisors have long suspected that some exchanges stretch the concept to market to EU residents without a license. Stronger powers would let regulators act against that practice directly rather than relying on national authorities.
The staking provisions have their own resonance. Staking products have been at the center of recent operational incidents in the market, and ESMA's push for disclosure would give European users a clearer view of the risks when a provider pauses or unwinds positions.
Recommendations, not law
None of this takes effect on its own. ESMA's paper is input to the Commission, which will decide what to propose to the European Parliament and member states. Any amendment would then go through the EU's legislative process, which typically runs well over a year.
Still, the direction is clear. Where the U.S. is debating how much room to give the industry, Europe's regulator is asking for a longer reach: into DeFi front ends, into yield products and across the bloc's borders.
What to watch: The Commission's own legislative proposal. If it adopts the DeFi-gateway concept, firms operating wallets and interfaces would need to decide whether to seek authorization or wall off EU users, a choice that would reshape access for one of the world's largest retail crypto markets.