National supervisors are currently in charge of overseeing crypto markets but French regulators have proposed huge reforms to bolster financial regulation across Europe. The plan will hand the European Securities and Markets Authority, the EU’s Paris-based regulator, greater powers. Regulators want stricter rules to control the ever-growing market for cryptocurrencies because of concerns they are being used by criminals to finance drug smuggling and other illegal activities.
The current European crypto market is currently estimated to be worth over £1 trillion.
But major markets have crashed, with prices of Bitcoin plunging eight percent and Ethereum down 21 percent.
Dogecoin dropped 21 percent and Binance Coin, XRP and Cardano were also down in the last 24 hours.
French regulators Autorité des Marchés Financiers said: “Granting Esma the power of direct supervision of public offers of cryptoassets in the EU and of cryptoasset service providers would create obvious economies of scale for all national supervisors and concentrate expertise in an efficient way, for the common European benefit.
“The EU should seriously consider a shift towards a truly centralised supervision of certain categories of entities and activities.”
The AMF is a vocal supporter of the need to reform the financial regulation processes and standards across Europe.
It wants to bolster the single market after Brexit and aid the EU’s post-coronavirus pandemic economic recovery.
Binance, one of the world’s largest crypto exchanges, shifted its operations to Malta in 2018.
The Maltese regulator said last year it was not responsible for regulating the exchange.
It highlighted there was ongoing uncertainty over who supervises the firm’s activities.
The French authorities want new supervisory tools to be given to Esma, such as so-called “no-action letters”.
The measures are used by their US counterparts to provide guidance on interpreting financial rules and regulations.
MUST READ: Von der Leyen scolded by US finance chief over ‘inflexible’ recovery
“Further major change seems unlikely in the short term given that Esma’s responsibilities and powers have recently been extensively reviewed,” she told the FT.
The AMF is also planning to demand that EU politicians leave key decisions to regulatory experts.
Ms Patterson said: “I have seen no clear evidence that co-legislators in the European Parliament and the Council want their remit to be diminished.”