The European Securities and Markets Authority (ESMA) has formally asked the European Commission to strengthen the Markets in Crypto-Assets Regulation (MiCA), arguing that investor protection in crypto "remains less comprehensive" than the framework governing traditional financial instruments.

In a submission to the Commission's public consultation on possible changes to the regime, which took effect in July, ESMA said the new rules have established a "solid framework for investor protection" but contain potential gaps that policymakers should close.

What does ESMA want changed?

The regulator's proposals cluster around three areas: disclosure, marketing and enforcement.

• Enhanced cost disclosure, giving investors "clearer information on costs, risks, rewards, collateral arrangements, and potential losses before investment decisions are made," ESMA said.
• More stringent marketing rules, particularly for crypto assets promoted by finfluencers.
• New disclosure requirements for staking, lending and borrowing activities.

The enforcement requests are the most consequential part of the filing. ESMA recommends enhancing its capacity to detect and deactivate fraudulent websites and to freeze crypto assets where market abuse or financial crime is suspected. It also wants stronger supervisory powers over unregulated firms operating in the EU market.

"These measures would support faster and more consistent supervisory action across the EU, better protecting investors, and reducing opportunities for regulatory arbitrage," ESMA said.

Stablecoin services and decentralization

The regulator also proposes that regulated firms seek authorization before offering stablecoin-linked services — a requirement that would extend the perimeter of MiCA supervision to a product category that has grown rapidly since the regime came into force.

Two definitional questions feature in the submission as well. ESMA calls for greater clarity on when activities count as genuinely decentralized, an issue that determines whether a project falls outside the authorization regime altogether. It also asks for guidance on how crypto assets should be classified, including newer products such as hybrid tokens that combine features of multiple token categories.

On the burden side, ESMA recommends streamlining parts of the existing regulation to improve consistency and reduce duplicative registration requirements in certain areas — a signal that the first months of MiCA implementation have surfaced overlapping compliance obligations for firms operating across member states.

A framework for tokenized securities

The final recommendation reaches beyond MiCA itself. ESMA urges policymakers to develop a dedicated framework for tokenized securities and on-chain settlement, with the stated aim of supporting "the development of an integrated market for tokenized securities."

That request aligns with broader EU capital-markets work, where the Commission has been weighing how distributed-ledger settlement fits into existing securities infrastructure. A tokenized-securities framework would sit alongside MiCA rather than within it, and ESMA's endorsement adds regulatory weight to that legislative track.

What happens next?

The Commission will now weigh consultation responses as it decides whether to propose amendments to MiCA. Any legislative change would follow the ordinary EU procedure, meaning ESMA's most enforcement-oriented requests — asset freezing and site deactivation powers — depend on political appetite in the European Parliament and Council. Firms already authorized under MiCA should watch the consultation outcome closely, since new pre-authorization requirements for stablecoin-linked services and expanded disclosure duties for staking and lending would directly reshape their product pipelines.