ESMA seeks power to freeze crypto assets on 'reasonable grounds' in its MiCA review

ESMA's complaint is about time. Its submission says current procedures are too slow to deal with suspected criminal activity and unauthorized operators ^[3], and that threats tied to money laundering or terrorist financing can slip away before a regulator can act at all ^[4]. It wants the new powers for itself and for national regulators ^[13].

The freeze request matters most to firms that hold customer assets. ESMA wants to freeze crypto assets on what it calls "reasonable grounds" linked to financial crimes ^[2]. Crypto Briefing, which reported the submission, says that standard gives regulators speed, but how the threshold is defined and what recourse exists for anyone caught in a mistaken freeze will likely shape how the industry responds ^[10].

The Commission has three realistic options. It could take the package largely as written. It could fold the powers into the wider debate about centralizing EU supervision ^[8], in which case who holds the freeze power becomes as contested as the power itself. Or it could keep the powers and define the threshold narrowly.

I think the enforcement risk falls hardest on firms outside the EU that solicit EU customers without MiCA authorization, the group ESMA singled out ^[7]. A firm without a licence has no licence to withdraw. Website blocking by national competent authorities ^[5] is the tool that reaches it. Crypto Briefing argues that if the measures against unauthorized non-EU operators go ahead, authorized providers would face less competition from rivals that skipped the licensing process ^[12].

The counter-thesis is that licensed firms pay for most of this. A ban on misleading marketing techniques, framed as taking effect immediately ^[6], applies to every firm that markets to EU customers. Crypto Briefing also expects tighter rules to bring higher compliance costs, and marketing restrictions to change how digital asset companies grow ^[9]. The submission as reported does not put a figure on either the compliance cost or the size of the unlicensed offshore business, so the gain to licensed firms cannot yet be set against the cost.

Blocking has its own limits. Scammers can relaunch under new domains, and national regulators may apply the power unevenly across member states ^[11]. If domains reappear faster than regulators can block them, offshore operators keep reaching EU customers while licensed firms absorb the new marketing and freeze rules, and this view is wrong. For now the proposals are recommendations, and the Commission still has to weigh them in its MiCA review ^[8].