The European Securities and Markets Authority (ESMA) has formally asked for broader enforcement powers over crypto firms, including the authority to order asset freezes where there are reasonable grounds to suspect links to financial crime, money laundering or terrorist financing.

The Paris-based watchdog laid out the proposals on Wednesday, September 30, in its formal response to the European Commission's consultation on reviewing the Markets in Crypto Assets Regulation (MiCA). Reuters reported the statement from Paris. The consultation remained open and under review at the time of ESMA's submission.

The core of ESMA's case is operational speed. Under current procedures, the authority argued, suspicious funds are typically gone before a freeze request clears legal review. "Because of current lengthy procedures, when the freezing of suspicious crypto assets (linked to criminal activities) is requested, it is often too late and the assets have disappeared," ESMA said.

The proposed freeze threshold matters for licensed firms. ESMA wants to act on "reasonable grounds to suspect" criminal links — a standard that sits below proven wrongdoing — giving enforcers room to move before an investigation concludes. For crypto-asset service providers, that would translate into a compliance obligation to execute freeze orders on suspicion, not just on judicial findings.

Website takedowns and offshore platforms

ESMA also identified website takedowns as a missing enforcement tool. National regulators, who carry day-to-day responsibility for enforcing MiCA, could gain the power to remove websites tied to scams or to crypto companies operating without authorization. The gap is concrete: a fraudulent platform can keep running after regulators identify it because no authority currently holds the legal power to pull it offline. A takedown mandate would shift national enforcement from a reactive posture toward prevention.

Cross-border activity forms the third enforcement pillar. ESMA said country-level regulators should get specific powers to act against crypto companies based outside the EU that actively solicit EU investors without authorization. The proposal targets offshore platforms that market aggressively to European customers while sitting entirely outside the bloc's licensing regime.

Marketing and disclosure rules

Beyond enforcement, ESMA proposed banning certain misleading marketing techniques used to promote crypto products. While the watchdog did not enumerate every technique covered, the direction is explicit: marketing that distorts risk or overstates returns would lose its free pass under EU rules.

The authority also called for dedicated rules on third-party marketing — promotion carried out by affiliates, influencers or partners rather than the licensed entity itself. That channel currently carries the loosest oversight, since a firm can distance itself from claims made by outside promoters even when those claims drive customer acquisition.

On disclosure, ESMA proposed that crypto companies be required to give customers full cost information. The watchdog framed this as investor protection rather than enforcement: standardized fee disclosure would let retail users compare providers on equal terms instead of navigating fragmented or hidden fee structures.

Supervision phase and industry pushback

The proposals arrive as MiCA enforcement enters a new phase. A group of European central banks submitted its own response to the same consultation the previous week, Reuters reported, signaling broader institutional pressure for changes.

ESMA Chair Verena Ross told the European Parliament's Committee on Economic and Monetary Affairs that the authority's MiCA work has shifted "from rulemaking towards supervision and convergence," adding that the goal is to let "innovation flourish within a framework that provides clarity for firms, safeguards for investors and confidence in the markets." Some regulators have raised concerns about regulatory divergence and uneven enforcement between member states, an issue that aligns with ESMA's planning for its 2027 supervisory work.

Industry voices are pushing in the opposite direction. An opinion piece published by day by Cointelegraph the same day argued the MiCA review should prioritize proportionality, warning that compliance costs have risen sharply since MiCA took effect and that layering on further requirements without clear risk justification could push smaller firms out of the market rather than make it safer.

The Commission must now weigh ESMA's enforcement wish list against those proportionality concerns. Where the MiCA review lands will determine whether national regulators gain freeze and takedown powers in time for the 2027 supervisory cycle.