EU Crypto Regulation: France Pushes for Stricter MiCA Enforcement & ESMA Oversight

Introduction

France is taking a hardline stance against crypto firms operating under the European Union’s Markets in Crypto-Assets Regulation (MiCA) due to perceived regulatory loopholes. The French financial regulator, Autorité des Marchés Financiers (AMF), warned it may block companies that use MiCA’s “passporting rights” to enter France through licenses from jurisdictions with weaker oversight. This move reflects fears of regulatory arbitrage, where firms shop for the most lenient EU rules, undermining uniform consumer protection and financial stability. France argues that MiCA’s promise of harmonized regulation could be threatened if some countries act as “weak links” in crypto licensing.

Alongside Austria and Italy, France is now calling on the European Securities and Markets Authority (ESMA) to take direct supervisory authority over major crypto companies. This push comes after the ESMA’s review of Malta’s crypto licensing regime, which it judged as only “partially compliant.” By transferring oversight to a central EU authority, France hopes to prevent gaps in enforcement that could lead to investor risks and market manipulation. Critics of Malta’s lighter regulatory framework warn that such weaknesses could destabilize Europe’s crypto market, especially with the upcoming rollout of MiCA across all 27 member states.

For the European crypto industry, these developments highlight growing tension between national regulators and EU-wide frameworks. While MiCA was designed to simplify compliance and foster digital finance innovation, France insists that stricter measures are needed to avoid loopholes and protect investors. The French move signals a broader debate over how to balance crypto regulation, innovation, and financial security in Europe. Ultimately, by pushing for tougher standards and centralized oversight, France is positioning itself as a driving force in ensuring MiCA works as intended—maintaining transparency, closing enforcement gaps, and safeguarding the EU’s financial system.

Background

France is raising red flags over the Markets in Crypto-Assets Regulation (MiCA) — the European Union’s landmark crypto law — warning that crypto firms could exploit loopholes by operating with licenses from jurisdictions that have weaker regulatory standards. While MiCA was designed to harmonize rules across the EU, France’s leading financial regulator, the Autorité des Marchés Financiers (AMF), says it may reject so-called “passporting rights”, which allow companies licensed in one EU country to operate across the bloc.

The rationale? Some member states may issue MiCA licenses more leniently than others, creating what regulators call a “weak link.” This could allow cryptocurrency exchanges or digital asset providers to bypass France’s stricter standards, potentially exposing French investors to higher risks. AMF Chair Marie-Anne Barbat-Layani described refusing passporting rights as a last resort but cautioned that France may use it “like an atomic weapon” if loopholes start undermining MiCA’s core mission: consumer protection, investor security, and market stability (Cointelegraph).

What Is MiCA and Why Does It Matter?

The Markets in Crypto-Assets Regulation (MiCA), officially adopted in 2023 and phased in from 2024 through 2026, is the world’s first comprehensive framework for regulating crypto assets at a regional level. Its goal is to:

• Protect consumers by requiring crypto companies to disclose risks and maintain operational security.

• Prevent regulatory fragmentation by creating one unified set of rules across all 27 EU member states.

• Provide passporting rights, meaning a license in one EU state allows a company to operate across the entire bloc.

In theory, this model reduces bureaucracy, making it easier for companies to expand across Europe. But critics such as the AMF argue that the system may encourage regulatory arbitrage: companies will seek licenses in member states with weaker oversight and still gain access to the lucrative EU market. This exact risk was highlighted in a 2025 review by the European Securities and Markets Authority (ESMA), which found Malta’s licensing process only “partially compliant” (ESMA peer review).

France, Austria, and Italy Push for Centralized Oversight

France isn’t alone. Austria and Italy have also signaled concerns and are urging that ESMA, the EU’s Paris-based markets regulator, take over direct supervision of major crypto firms. A centralized approach could ensure consistent enforcement, avoiding gaps that occur when national regulators interpret MiCA differently.

Supporters of centralized oversight argue that without it, Europe risks fragmented enforcement — meaning a crypto platform licensed with lighter supervision in one jurisdiction could cause ripple effects across the EU. The experience of poorly regulated jurisdictions like Malta reinforces this concern. ESMA’s peer review cited insufficient oversight of crypto service providers there, raising questions about how other smaller states may manage complex cases.

Meanwhile, countries like Germany and France — which already have more developed licensing regimes — fear their stricter domestic standards will be undercut if MiCA’s passporting system isn’t enforced evenly.

What This Means for the Future of Crypto in Europe

For crypto traders, exchanges, and investors, France’s stance adds uncertainty to how MiCA will work in practice. If Paris follows through on blocking EU passporting rights, crypto companies may face fragmented compliance requirements, a setback to MiCA’s vision of simplifying market access.

On the other hand, a push for stronger EU-level supervision could make MiCA a global standard for crypto regulation. Experts note that if ESMA gets greater authority, the European Union could set benchmarks similar to financial regulations like MiFID II in traditional finance. Such oversight would likely require higher capital reserves, stricter cybersecurity protocols, and tighter protections for retail investors.

Ultimately, France’s move signals that MiCA is not the end of the regulatory debate. Instead, it may be just the beginning of Europe’s ongoing experiment with balancing innovation, consumer protection, and financial stability in the crypto sector.

As global markets watch, one thing is clear: Europe is shaping itself as a regulatory leader in digital finance — and how this plays out will influence both crypto adoption and regulatory strategies worldwide.