ESMA Review Targets Crypto Custody Under New EU Rules

The European Securities and Markets Authority is starting a detailed review of crypto custody providers. The move comes under the Markets in Crypto-Assets Regulation, which is now fully enforceable across the European Union.

ESMA's review follows the end of the transitional period for unauthorized Crypto-Asset Service Providers. The regulator wants custody providers to meet the same standards as traditional financial firms, focusing on licensing and client asset segregation.

The review process marks a shift from the initial registration phase to active enforcement. Custody providers that fail to meet the new standards could face restrictions or lose their authorization to operate in the EU.

Ethereum Core Developers and major institutions like BlackRock and Fidelity are watching the process closely. The outcome could affect how these firms structure their European custody operations and which assets they offer to EU clients.

The CLARITY Act in the U.S. could add another layer of regulatory pressure on crypto custodians operating across both jurisdictions. Firms with dual exposure face the highest compliance costs.

ESMA has not set a specific timeline for completing the review. The agency said it will issue supervisory guidelines once the process is finished.