ESMA Direct Supervisory Powers Over Significant CASPs 2026

The designated CASP framework

MiCA establishes a two-tier supervisory framework for CASPs. The default tier is home NCA supervision under Articles 63 and 88 — single home-state supervisor with cooperation across the EU under the standard framework. The enhanced tier applies to CASPs designated under Article 85 — additional EBA coordination, ESMA direct powers under Articles 92-94, and enhanced reporting obligations.

The two-tier model parallels the systemic-institution framework in EU banking and the systemic-investment-firm framework in MiFID II. The principle: very large CASPs produce EU-wide market-integrity and consumer-protection implications that warrant coordinated EU-level supervision alongside national supervision.

Designation under Article 85 is consequential. It triggers the enhanced framework. Operators approaching the thresholds need to understand the enhanced framework before it applies, not after.

Article 85 designation thresholds

Article 85(1) sets three principal designation pathways:

EUR 9 bn average client assets. Six-month average of client assets held in custody or under management. The metric captures custody-heavy CASPs and asset-management-style CASP activity.

EUR 4.5 m average daily users. Six-month average of daily-active EU users. The metric captures retail-platform-style CASPs with very large user populations.

Specific impact criteria. EBA assessment of CASP impact on EU consumer protection, market integrity, or financial stability. The criterion is qualitative and complements the quantitative thresholds.

Designation by EBA follows a defined procedure with home NCA consultation, applicant notification, and right to make representations. Designation decisions appear on the ESMA-maintained register and produce immediate enhanced-framework application.

The quantitative thresholds capture the largest 8-15 CASPs operating in the EU as of 2025-2026. The qualitative impact criterion can capture additional operators where EBA considers their EU-wide impact warrants enhanced supervision.

Article 92 information request powers

Article 92 gives ESMA direct information-request rights over designated designated CASPs. ESMA can request:

Operational information. Trading volumes, customer numbers, geographic distribution of activity, product mix, and operational metrics relevant to EU-wide impact assessment.

Governance information. Board composition, key-person CVs, governance framework documentation, internal-control reports, and risk-management framework.

Financial information. Capital position, profit and loss, segregated client asset reconciliation, prudential metrics, and capital plans.

AML metrics. AML framework KPIs, suspicious-transaction-report volumes, customer due-diligence performance metrics, and AML risk assessments.

ICT information. ICT framework documentation, third-party register, incident logs, resilience testing results, and DORA compliance metrics.

Conflict-of-interest framework data. COI policy documentation, COI register, supervisor-reportable COI events, and remediation actions.

ESMA can request any information considered relevant to its supervisory mandate. The scope is broad. The principle: ESMA needs sufficient information to discharge its supervisory role over designated designated CASPs and the information access mechanism supports that.

Designated CASPs respond to ESMA information requests directly. The home NCA receives copies of requests and responses but the supervisory channel is direct ESMA-to-CASP. The operational implication: designated CASPs maintain a dual supervisor relationship from the moment of designation.

Article 93 on-site inspection powers

Article 93 gives ESMA direct on-site inspection powers over designated designated CASPs. The powers operate as follows:

Inspection initiation. ESMA notifies the home NCA of the inspection plan. Home NCA can join the inspection or observe. ESMA proceeds with or without home NCA participation.

Inspection scope. Broad inspection rights covering operations, governance, financials, AML, ICT, conflict-of-interest framework, and any matter relevant to ESMA’s supervisory tasks. The scope is functionally similar to home NCA supervisory inspection rights.

Inspection procedure. Inspection team conducts on-site review at CASP premises. Document production, interviews with personnel, and review of operational systems are within scope. The inspection produces a written report with findings.

Coordination with home NCA inspection. Where the home NCA is conducting its own inspection cycle, ESMA coordinates timing to minimise duplication. Joint inspections are possible by agreement.

For designated designated CASPs the operational implication is dual inspection cycles. Home NCA inspection cycles continue under the standard framework. ESMA inspection cycles operate alongside. Operational planning for inspection-readiness needs to account for both supervisor angles.

Article 94 binding decision powers

Article 94 gives ESMA binding-decision authority over designated designated CASPs in specified circumstances. The framework is procedurally bounded.

Scope. Binding decisions are available where home NCA action is inadequate to address EU-wide concerns or where the matter is cross-border-systemic. The scope is not general ESMA-direct-supervision authority — it is escalation-based and bounded to specific scenarios.

Procedure. ESMA notifies the home NCA of the proposed binding decision. Home NCA has opportunity to respond. The CASP receives notification and right to make representations. ESMA issues the binding decision in writing with reasons.

Enforceability. ESMA binding decisions are directly enforceable against designated designated CASPs. They do not require home NCA implementation. The CASP has appeal rights under EU procedural law to the EU Court of Justice through Article 263 TFEU.

Coordination with home NCA. Where ESMA issues a binding decision, the home NCA retains primary supervisor role for unrelated matters. The framework does not transfer general supervision to ESMA — it provides ESMA with targeted intervention authority where home NCA action is inadequate.

The binding-decision framework is the most operationally serious feature of the Articles 92-94 regime. Use cases in EU supervisor practice will develop over the 2026-2028 period as designated CASP supervision matures.

Dual-supervisor operational reality

For designated designated CASPs the operational reality is dual supervisor relationship. Two principles for managing the dynamic:

Maintain clean home NCA relationship. Home NCA primacy under Article 88 means the home supervisor remains the principal day-to-day supervisor. Clean home NCA dialogue, prompt response to supervisor concerns, and proactive supervisor engagement reduce friction.

Build direct ESMA relationship. Designated designated CASPs interact with ESMA directly under Articles 92-94. Building a constructive direct ESMA relationship parallels the home NCA relationship. Treating ESMA as remote or hostile produces avoidable friction.

The dual-supervisor framework can feel resource-intensive for designated CASPs. The operational cost is real. The benefit: coordinated EU-wide supervision that reduces the risk of fragmented supervisor concerns produced by member-state-by-member-state regulator dynamics.

EBA coordination layer

Where a designated CASP also issues ART or EMT tokens above the relevant Title III or Title IV thresholds, EBA’s coordination role adds another supervisory layer. The framework produces three coordinated supervisors:

Home NCA. Primary supervisor for the CASP authorisation and ART/EMT issuer authorisation. ESMA. Direct supervisory powers over the CASP designation under Articles 92-94. EBA. Coordination role for the ART/EMT issuer authorisation, supplementary supervisory information access, supervisory college chair role.

The three-supervisor framework is operationally complex but reflects the multi-dimensional regulatory exposure of CASPs that also issue large-scale tokens. Operational planning for issuer-and-CASP combined operators needs to address all three supervisor angles.

Annual designation review

Article 85(7) provides for annual EBA review of designation status. CASPs can be:

De-designated. If the CASP falls below thresholds for a sustained period and the qualitative impact assessment supports de-designation, EBA can de-designate. The CASP returns to standard home NCA supervision.

Re-designated. If thresholds are exceeded again after de-designation, re-designation reactivates the enhanced framework. The de-designation status is not necessarily permanent.

Newly designated. New CASPs crossing the thresholds for the first time can be designated at the annual review. The newly designated CASPs need to build the operational framework to accommodate dual supervision quickly.

The annual review framework produces designation status as a moving population. Operators approaching the thresholds should plan operational frameworks for designation before they cross the line, rather than after.

Practical takeaways

Articles 92-94 produce a real and operationally consequential ESMA direct-supervision framework for designated designated CASPs. The framework is procedurally bounded but materially affects designated operators’ supervisor relationship and operational planning.

Three principles for operators approaching or in scope of designation:

Plan for the dual-supervisor framework before designation lands. Building the operational infrastructure to accommodate ESMA direct engagement takes time. CASPs approaching thresholds should plan governance, reporting, and supervisor engagement framework for designation before the threshold crosses.

Choose home state with EU-coordination behaviour in mind. Home NCAs that work cleanly with ESMA produce smoother designated-CASP operations. Home NCAs with weaker ESMA-coordination history produce more friction. For CASPs likely to scale into designation, home NCA choice matters more than the standard CASP analysis would suggest.

Treat ESMA as a working supervisor relationship from day one of designation. ESMA engagement under Articles 92-94 is direct and ongoing for designated designated CASPs. Building a constructive direct ESMA relationship — proactive information sharing, prompt response to requests, professional dialogue on concerns — produces better operational outcomes than treating ESMA as remote.

The designated CASP framework is one of MiCA’s most consequential features for the largest EU crypto operators. Understanding it is essential for operators in or near the designation threshold.

For corrections, updates, or counsel referrals on Article 85 designation or Articles 92-94 ESMA direct supervision, email [email protected].