EU accuses Malta of mismanagement of crypto licenses!

EU accuses Malta of mismanagement of crypto licenses!

On July 10, 2025, the European Securities and Markets Authority (ESMA) published a critical analysis of Malta's licensing process for crypto service providers. The investigation was initiated in a context marked by concerns about the speed and care in issuing permits. ESMA specifically examined whether the level of risk when granting a license to a particular crypto company was adequately assessed by the Malta Financial Supervisory Authority (MFSA) and concluded that this was not the case. This announcement has far-reaching implications for the entire European crypto market.

ESMA emphasizes that the approval process in Malta has been under close scrutiny since June. A key finding of the investigation is that while the MFSA has sufficient expertise and resources, the approval process only “partially” met expectations. The licensing review took place in the context of a number of events of concern.

Criticism of the approval process and recommendations

ESMA's assessment highlights that significant issues at the crypto company that was granted the license were still unresolved at the time of approval. The company’s regulatory history was not “appropriately taken into account.” This makes the peer review findings particularly important as they provide recommendations to strengthen the approval processes for Crypto Asset Service Providers (CASPs) in Malta.

The peer review recommended that all EU national supervisory authorities pay particular attention to specific risk areas, including business growth, conflicts of interest, governance and internal arrangements and IT systems. ESMA emphasizes the need to promote the proper approval of CASPs by all national supervisory authorities in the EU. Such an approach is crucial to ensure that authorizations granted are appropriately assessed and to improve convergence in the authorization process across the EU.

The new regulatory framework: MiCA

The regulatory framework for cryptocurrencies in the EU has been revamped by the EU Markets in Crypto-Assets Regulation (MiCA), which came into force this year. Companies wishing to offer crypto services must now obtain a license from a national regulator to operate within the EU. Another advantage of this regulation is the so-called “passporting”, which allows companies to use their license in other EU member states.

ESMA has carried out the review of the MFSA's approval approaches to ensure that such issues are avoided in future approvals. There is no question that a more thorough and timely implementation of the approval process is necessary to increase confidence in the crypto market and its regulatory framework.

For Malta, which is considered a key location for crypto businesses, the successful implementation of ESMA's recommendations is crucial not only to fulfill its own supervisory obligations, but also to meet the requirements of the EU as a whole.

Marketscreener reports that the MFSA has issued five licenses for crypto service providers under MiCA since January. Despite the progress, the footnote of this review is that significant improvements are still needed to secure the future of the crypto sector in the EU.

Another assessment that underlines the ongoing discussions and the importance of cross-border cooperation can be found in ESMA's findings. Comprehensive cooperation between national regulators will be crucial to take the cryptocurrency regulatory landscape to a higher level. You can read more about this in ESMA's findings on how ESMA explains what the challenges and opportunities in this rapidly evolving area look like.