BaFin official warns centralized MiCA oversight may add burdens

Stephan Mögelin of Germany’s Federal Financial Supervisory Authority (BaFin) warned that a shift to a centralized EU supervisor for crypto‑asset service providers could create extra work for firms and limit the flexibility they currently enjoy under the Markets in Crypto‑Assets (MiCA) framework.

Centralized supervision vs. national expertise

Mögelin noted that national regulators retain deep knowledge of local markets and business models. He argued that a central supervisor might rely heavily on this national expertise, potentially leading to a more uniform but less adaptable application of specific provisions, similar to observations made in the EMIR regime.

Potential operational impact

Transferring supervisory responsibility after firms have completed national authorization procedures could add administrative steps. Market participants would need to evaluate whether the benefits of a single EU‑level passport outweigh the additional burdens of a centralized oversight model.

MiCA licensing and the passport system

Under MiCA, a crypto‑asset service provider can obtain authorization from a national regulator and then operate across the European Economic Area (EEA) using a passport. While this reduces the need for multiple approvals, the approach still depends on how the home regulator applies the rules. The recent approval of Ripple’s MiCA license by Luxembourg’s regulator illustrates how firms can combine crypto‑service provider status with an electronic money institution licence to offer regulated payment services across the EEA.

Missing private‑law framework

Mögelin highlighted that most EU member states lack a consistent private‑law regime for crypto assets. Without such a framework, questions of ownership, transfer, contractual claims, and creditor treatment in insolvency remain fragmented, potentially leading to different legal outcomes for the same token in different jurisdictions.

E‑money tokens and tokenized settlement

The BaFin official discussed e‑money tokens—stablecoins pegged to official currencies—and their growing relevance for tokenized securities settlement. By providing the cash leg of a trade on blockchain‑based infrastructure, e‑money tokens could reduce settlement delays and completion risk. Regulators are also considering whether services involving e‑money tokens might extend to credit or lending functions.

Broader regulatory context

The discussion mirrors challenges faced by U.S. regulators, where tokenized securities fall under securities law while the stablecoins used for settlement raise separate payment‑regulation questions. Mögelin did not call for eliminating national authorities but emphasized that any centralized model should still draw on member‑state expertise.