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FollowingThe European Securities and Markets Authority launches special regulatory action against crypto asset service providers
The European Securities and Markets Authority (ESMA) has launched a special regulatory action against crypto asset service providers, in which custody arrangements have become the core focus of the European Union\'s regulatory advancement after the implementation of the Crypto Asset Markets Regulation (MiCA). As the European Union\'s financial market regulator, ESMA announced a joint regulatory action on crypto asset service providers focusing on the resilience of digital operations. The initiative coordinates national authorities of EU member states to jointly assess how licensed service providers can fulfill their custody and custody obligations under the MiCA framework.
This action follows the end of the MiCA transition period. During the transition period, existing encryption companies can continue to operate in accordance with the original systems of various countries. ESMA confirmed in a public statement that the transition window is now closed, which means that all crypto asset service providers operating in the EU must hold a full MiCA authorization.
Why custody has become the core of EU crypto regulation
Custody providers hold customer assets on behalf of investors, making them a key control node in the digital asset value chain. Once the custodian makes mistakes or mishandles assets, the losses will be borne directly by the end user-this is why regulators have made custody a priority for front-line supervision. According to MiCA requirements, companies providing custody and management of crypto assets must meet specific regulations on customer fund isolation, operational resilience, and governance control. ESMA\'s collaborative review showed that regulators aim to verify compliance with these requirements across jurisdictions, rather than relying solely on individual actions by national authorities.
The regulatory focus on custody is consistent with a broad trend of some exchanges seeking banking licenses in Europe to improve institutional standards. For companies that established operations in the relatively loose regulatory environment before MiCA was implemented, this review constitutes a specific compliance inspection node.
What should escrow providers and market participants focus on
Joint regulatory action usually means that ESMA coordinates national authorities while reviewing specific risk areas for multiple companies. Review results often lead to the release of public reports, updates to guidance, or in some cases the initiation of enforcement procedures. Hosted service providers operating in the EU should expect to receive information requests and regulatory inquiries from their national authorities as part of this coordinated action. Companies that have not yet made their operational resilience framework fully compliant with MiCA requirements will face the most direct review.
The impact of this review also extends beyond the EU. As U.S. regulators advance their own crypto regulatory agendas, ESMA\'s approach to custody regulation may affect how other jurisdictions define custody standards for digital assets. Market participants should pay attention to ESMA\'s official announcements to obtain the scope of the review, timetable and any phased findings. Regulators have not announced a deadline for completing the review, but common regulatory actions typically issue public reports within 12 to 18 months of their launch.
