Preserving national supervision of CASPs under MiCAR

Abstract

This paper contributes to the ongoing debate at the European level regarding the possible centralisation of supervision for Crypto-Asset Service Providers (CASPs), highlighting concerns about regulatory efficiency, governance structures, and the preservation of national supervisory diversity. It contends that the push toward centralisation risks destabilising the crucial balance between harmonisation and subsidiarity embedded within the EU’s constitutional framework, as articulated in Articles 5(3) and 5(4) of the Treaty on European Union (TEU) and interpreted through case law such as the Working Time Directive (C-84/94). Moving beyond mere administrative considerations, the paper explores fundamental constitutional principles, examining the opportunities for supervisory convergence under the Markets in Crypto Assets Regulation (MiCAR). It also discusses the risks of conflating CASPs with traditional banking institutions—systems that have undergone centralised supervision within the Eurozone—and emphasises the importance of localised, tailored supervision for CASPs. The paper addresses practical issues related to centralisation, underscores the necessity of stakeholder engagement, and proposes pathways for achieving supervisory convergence that retain the benefits of national oversight. Central to this discussion is the advocacy for a framework for “knowledge sharing in financial supervision” as a viable alternative to centralisation—focusing on enhanced cooperation and collaborative convergence among national authorities, leveraging existing resources to build a more integrated, resilient supervisory environment across the EU.