BaFin official warns centralized EU crypto oversight risks market friction

Mögelin argued that moving authorization responsibilities from national regulators to a centralized entity would complicate compliance for businesses already navigating established domestic procedures. Drawing parallels to the application of EMIR, he suggested that a centralized model risks losing the granular understanding of individual markets that national authorities currently provide. For service providers, shifting oversight mid-stream could create administrative hurdles without delivering clear benefits to clients or market participants.

Beyond supervisory structure, the discussion at the European Blockchain Convention underscored a deeper legal gap: the lack of a harmonized private-law framework for digital assets across member states. While MiCA provides a regulatory umbrella for financial services, it does not resolve fundamental questions regarding token ownership, contractual claims, or insolvency protocols. Mögelin noted that without common treatment, the same asset could be subject to divergent legal interpretations depending on the jurisdiction, creating a layer of fragmentation that even a centralized supervisor might struggle to mitigate.

As regulators evaluate the future of the framework, the conversation has also turned toward the integration of e-money tokens within traditional market infrastructure. Mögelin pointed to the potential for these tokens to facilitate the cash side of tokenized financial transactions, potentially bridging the gap between blockchain-based settlement and conventional banking. However, he cautioned that regulators remain divided on how far these services should extend into credit and lending, leaving the balance between innovation and oversight a primary point of contention.