The European Securities and Markets Authority wants European supervisors to gain faster tools for freezing certain crypto assets and taking fraudulent websites offline. The proposals appear in ESMA’s September 30 response to the European Commission’s review of the Markets in Crypto-Assets Regulation.
This is a policy submission, not an enacted expansion of MiCA. The Commission and EU lawmakers would need to adopt legal changes before the proposed powers could apply. That boundary is important for readers assessing what supervisors can do today.
The proposed freeze power has a defined trigger
ESMA says national competent authorities should have explicit powers to order the removal of scam or unauthorized websites. It also proposes giving ESMA direct authority to require a crypto-asset service provider to freeze specific assets when there are reasonable grounds to suspect links to market abuse, financial crime, money laundering or terrorist financing.
Under the proposal, a freeze would last as long as needed for investigation and enforcement by the relevant authorities. ESMA argues that current cross-border procedures can be too slow, allowing assets to move before a request reaches the service provider. The document does not propose a general freeze of a platform or an asset class.
The response also seeks stronger tools for firms outside the EU that solicit European investors without MiCA authorization. For stablecoins, ESMA asks lawmakers to state explicitly that an authorized service provider cannot offer licensable MiCA services involving asset-referenced or e-money tokens that do not meet the regulation’s requirements.
DeFi access could become a regulated service
ESMA identifies another gap where authorized companies give clients an interface to decentralized exchanges, lending protocols, staking systems or other smart contracts. It proposes a new regulated “gatekeeper” service for providers that give clients this access.
The regulator also wants MiCA to define when a service is fully decentralized. Its paper says the exemption should remain narrow to limit what it calls “decentralisation washing,” where an identifiable operator uses DeFi terminology to avoid regulatory duties. The recommendation focuses on intermediated access rather than declaring every protocol subject to the same rules.
Staking would not automatically be treated as lending
For staking, ESMA recommends targeted conduct, disclosure and safeguarding requirements for authorized providers. The paper separates self-directed staking, technical services, pooled or custodial staking, and liquid or yield-bearing products. It says staking should not automatically be classified as lending or investment management.
Those categories matter because custody, lockups, slashing exposure and reliance on third-country infrastructure can produce different risks. ESMA’s approach would require rules to follow the service being offered instead of applying one label to every staking arrangement.
The submission gives the Commission a menu of amendments for the MiCA review. Until legislation changes, it should be read as a regulator’s requested direction: quicker intervention against suspected illicit assets and scam sites, clearer limits for unauthorized stablecoins, and defined obligations where regulated companies connect clients to DeFi or staking services.
Adapted from ESMA Calls for New Powers to Freeze Crypto Assets and Block Fraud Sites in MiCA Review.