Europe’s securities regulator has warned that crypto’s growing links with traditional finance need closer monitoring as the EU moves into enforcement of its new licensing regime for digital asset firms.
ESMA Warns Crypto Links Need Close Watch as MiCA Deadline Nears
18 June 2026 - 12:31 CEST
By Matt Neill
The European Securities and Markets Authority (ESMA) said in its 2025 annual report that crypto asset exposures and interconnections with the traditional financial system should be watched as markets expand and business models evolve. ESMA said innovation can make EU capital markets more competitive, but it also requires vigilance, guardrails and cross-border cooperation.
The warning comes as the EU’s Markets in Crypto-Assets (MiCA) regime shifts from rulemaking to enforcement. Crypto firms operating under transitional arrangements must secure authorization by the end of June to keep serving clients across the bloc, under the new framework.
MiCA deadline tests exchanges
That deadline has raised the stakes for large global exchanges. It was reported this week that Binance, the world’s largest crypto exchange by trading volume, is expected to have its application in Greece rejected. Binance disputed that account, saying its application was found compliant and that it has engaged constructively with regulators over the past 18 months.
Without approval, Binance would not qualify to serve EU clients under the unified regime from 1 Jul. Several competitors have already obtained authorizations, putting pressure on firms still waiting for national approvals.
MiCA was designed to give licensed firms passporting rights across the EU – meaning a firm approved in one member state can serve clients in others – but implementation still depends on national regulators applying the framework consistently.
Digital finance risks widen
ESMA said technological innovation can support more competitive EU capital markets, but also requires vigilance, guardrails and cross-border cooperation. It said its 2025 digital finance work covered distributed ledger technology, decentralized finance and artificial intelligence.
The regulator said it strengthened data-driven supervision of crypto markets and worked with national authorities on tools to collect onchain and offchain data under MiCA.
ESMA and the European Banking Authority also examined DeFi, including crypto lending, borrowing and staking, as well as the risks linked to maximum extractable value, or MEV – the value a validator or other participant can capture by changing transaction order in a blockchain block.
The joint work found DeFi remains a niche part of the market, but one that carries money laundering, leverage and interconnectedness risks. ESMA said the work supports evidence-based monitoring of innovation and emerging risks.
