“What we’ve seen, for example, in the application of EMIR, is that with a centralised supervisor, one might assume the application and understanding of specific provisions also becomes somewhat centralised,” he said.
According to Mögelin, centralization could leave crypto-asset service providers with less flexibility when regulators apply individual provisions. Moving responsibility after companies have already completed national authorization procedures could also create additional work.
“Market participants and clients should decide what they consider beneficial, because these firms currently go through an authorisation process, and shifting responsibility to a centralised entity might add burdens regardless of the outcome.”
Under MiCA, a crypto-asset service provider can obtain authorization from a national regulator and use the resulting passport to operate across the European Economic Area. A centralized model would transfer some supervisory responsibility from national authorities to an EU-level body.
MiCA licensing has divided access to the EU market
MiCA has created a common licensing structure for exchanges, custodians and other crypto service providers, although national regulators continue to process applications and supervise licensed firms.
In July, Ripple secured its MiCA authorization from Luxembourg’s Commission de Surveillance du Secteur Financier. The approval permits the company to offer regulated crypto payment services across 30 European Economic Area countries.
As crypto.news previously reported, Ripple paired the crypto-asset service provider license with an electronic money institution license. The combination supports payment services involving crypto assets and stablecoins under the company’s European structure.
MiCA’s passport system can reduce the need for separate approvals in every participating country, but Mögelin’s remarks point to the trade-off between consistent supervision and national discretion. Firms may receive access across the region through one authorization while remaining dependent on how the regulator in their home jurisdiction applies the rules.
The EBC media briefing said the MiCA consultation had been extended to Sep. 30. During the panel, moderator Tommaso Astazi of Blockchain for Europe asked which areas of the framework required changes and whether supervision should move toward a centralized structure.
Private law remains incomplete for crypto assets
Mögelin identified the legal treatment of crypto assets outside financial-services regulation as another unresolved issue.
“From a supervisory and risk-management perspective, what we’ve seen so far is that MiCA and other European frameworks provide only a regulatory framework for financial services.”
“What’s still missing in most member states is a private law framework for specific crypto assets.”
Private law governs questions such as ownership, transfers, contractual claims and the treatment of assets when an intermediary fails. A financial-services license can regulate the conduct of an exchange or custodian without resolving every question about who legally owns a token or how creditors should treat it during insolvency.
Mögelin said the consultation was considering whether a European-level private-law framework could prevent another layer of fragmentation. Without common treatment, the same token could fall under different ownership or insolvency rules depending on the member state handling the dispute.
Similar ownership questions have emerged around tokenized securities. A token can record a transaction on a blockchain, but the legal register, custody agreement and applicable securities law determine whether the holder owns a share, a beneficial interest or only a contractual claim.
The United Kingdom is addressing related questions outside MiCA. In September, the House of Lords backed a digital asset strategy amendment by 194 votes to 138.
The proposed strategy would cover crypto assets, stablecoins, tokenized securities and digital settlement systems. The Treasury would have 12 months after Royal Assent to publish the strategy, although the bill must still pass through the House of Commons before the requirement becomes law.
E-money tokens could support tokenized settlement
During the BaFin panel, Mögelin also discussed the role of e-money tokens, a MiCA category covering crypto assets designed to maintain their value by referencing one official currency.
He said the convergence of crypto service providers and conventional financial institutions had increased interest in using e-money tokens inside traditional market infrastructure. One possible use involves supplying the cash side of transactions in tokenized securities.
Tokenized trades require both the asset and payment legs to settle. If one side moves through blockchain infrastructure while the other remains dependent on conventional bank transfers, the parties can face delays or completion risk.
Mögelin said regulators were discussing whether services involving e-money tokens could extend to credit or lending. In his account, such services could increase efficiency for companies operating across both crypto assets and tokenized financial instruments.
U.S. regulators face a related division between securities oversight and payment regulation. A tokenized stock generally falls within securities rules, while the stablecoin used to settle the trade can raise separate questions involving reserves, redemption rights, banking relationships and federal or state supervision.
Mögelin’s comments did not call for removing national authorities from the MiCA system. He said even a centralized supervisor could benefit from member-state expertise, while firms and their clients should assess whether transferring authorization responsibilities would provide enough value to offset the operational burden.
