EU Regulators Eye Tighter MiCA Control; Pooled Order Books Under Scrutiny
Pooled Order Books Under Scrutiny as EU Watchdogs Aim to Reinforce MiCA Supervision
The European Securities and Markets Authority is gearing up to assume greater, more unified oversight of crypto legislation throughout the 27-nation trading bloc, according to reports.
By Ian Allison|Edited by Sheldon RebackUpdated Nov 12, 2025, 12:59 p.m. Published Nov 12, 2025, 12:38 p.m.
What to know:
- Regulators at the European Commission level are reportedly aiming for a more consistent implementation of MiCA regulations that took effect at the close of the prior year.
- France’s monetary authority communicated to CoinDesk that guidelines concerning domestic order books in the EU should be explicitly and unambiguously integrated within the MiCA structure.
- According to legal experts at Norton Rose, mandating EU-exclusive pools for the bloc’s crypto markets could likely break up liquidity and enlarge spreads.
Scarcely a year into the European Union’s Markets in Crypto Assets (MiCA) system, designed to establish a cohesive regulatory setting across the 30 countries within the European Economic Area, vulnerabilities are starting to emerge, and indications suggest EU authorities are seeking to ensure these don’t worsen.
Apprehensions have already arisen about some member nations issuing licenses with undue haste, and current reports indicate that the European Securities and Markets Authority (ESMA) is preparing to exert greater, more centralized influence over crypto governance across the nations under its jurisdiction.
Currently, ESMA’s strategies are not detailed, but MiCA policy observers are aware of where to seek potential indicators. One probable modification, seemingly technical yet capable of triggering considerable ripple effects, pertains to the distribution of liquidity outside the EU and the utilization of consolidated order books.
From a regulatory standpoint, a shared order book obscures accountability for matching, disclosures, risk mitigation, and optimal execution. From the perspective of a trader, combining buy and sell orders across a broader demographic generates enhanced liquidity, streamlined transactions, and more precise pricing.
ESMA refrained from commenting specifically on shared order books, but indicated via email that the stance articulated in a Q&A earlier in the year (stating that MiCA does not allow a crypto trading entity to consolidate its order book with trading platforms outside the EU or not governed by MiCA) “is a component of the endeavors ESMA has initiated, and will continue, to ensure an equitable framework in the implementation of MiCA within the EU.”
“Shared order books have been a possibility for quite some time, fostering substantial liquidity,” noted Nikolai de Koning, a financial services attorney at Norton Rose, during an interview. “However, following the ESMA Q&A, regulators have been querying applicants and firms regarding their methods for segregating order books. Consequently, firms have been required to illustrate how they separate these order books, encompassing some of the largest exchanges. Certain platforms have established distinct order books — for EU and non-EU operations — enabling them to function autonomously.”
Advocating for clarity
The impetus for amplified centralized oversight partially originates from EU member state regulators themselves, known as national competent authorities. France’s financial regulator, the AMF, along with Austria’s FMA and Italy’s Consob, jointly petitioned ESMA to exert stricter control over MiCA in a co-authored letter in September. The AMF specifically addressed domestic order books in an email to CoinDesk:
“The emphasis on maintaining effective control within the EU aims to encapsulate, among other aspects, the necessity for trading and execution operations — including those involving domestic order books — to be effectively situated and overseen within the Union,” the AMF clarified.
“From our perspective, it is vital that this interpretation is explicitly articulated at Level 1 of the MiCA framework. Incorporating this clarification directly into the legislative document would ensure heightened legal certainty and more efficient supervision by mitigating ambiguities regarding what constitutes genuine EU-based substance and control over crypto trading infrastructure,” the regulator asserted.
What ramifications would this entail? Historically, crypto trading companies have shared liquidity with platforms outside the EU, making any modification significantly pertinent to the majority of crypto trading platforms, as well as proprietary trading firms engaged in crypto trading and numerous other stakeholders in the market, according to de Koning.
The crucial details will lie in what EU regulators deem acceptable, as they are still refining their strategy. Certain platforms engage in liquidity sharing while maintaining operationally distinct books: there is some routing between the books, but the actual matching occurs separately on each venue, de Koning explained. In such instances, a fully unified book is absent, yet some advantages of liquidity sharing remain.
Increasing spreads
Beyond the operational and legal complexities of altering a shared order book, it will also influence EU markets, according to de Koning.
“This will further concentrate price discovery within the EU, affecting order flows and overall liquidity. The more expansive the pool, the better the liquidity for platforms and their users. In my assessment, mandating EU-only pools is likely to fragment liquidity and initially widen spreads; markets typically adjust, but the transition will not be immediate,” he stated.
For certain crypto firms, the required adjustments may not pose significant challenges. However, for a large exchange relying on liquidity from outside the bloc, substantial operational changes could be necessary.
Coinbase (COIN), listed in the U.S., could be one such firm. Coinbase holds authorization as a broker in Luxembourg, rendering the ESMA “Broker Model Opinion” more relevant. This opinion stipulates that EU member state regulators should ensure that any crypto firm submitting an application “does not intend to secure ‘legal cover’ within the Union for firms in third countries seeking to solicit clients or prospective clients in the Union through a MiCA-authorized entity (typically part of the same group), while still delivering services from outside the Union.”
'In the right place'
Tom Duff Gordon, VP of international policy at Coinbase, remarked that the ESMA opinion “essentially landed in the right place,” and the situation does not warrant immediate revision. He also expressed “surprise” at the joint proposal from the AMF, FMA, and Consob advocating for revisiting areas like order routing, considering MiCA is barely a year old.
“Initially, the validity of having two distinct components was unclear, as was whether liquidity was required to be onshore. We’ve consistently argued that both models are legally defensible. We currently function as a broker to our U.S. exchange, enabling us to offer European clients optimal execution and robust liquidity,” Duff Gordon stated in an interview with CoinDesk.
“We sincerely believe that by operating as a broker in our current manner, we can secure the best results for our clients,” Duff Gordon continued. “I believe that as long as this is achievable, and as long as European operations possess sufficient substance — which we undoubtedly do — and as long as the local entity retains control over execution, then, similar to international finance under MiFID, having both broker and local platform models is entirely justifiable.”
Coinbase’s regulator, Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF), commented via email: “Within the framework of MiCA, the CSSF fully complies with EU regulations and collaborates closely with other national competent authorities and relevant European authorities to promote supervisory convergence.”
Dea Markova, director of policy at crypto technology firm Fireblocks, noted that it remains uncertain whether being part of a large and extensively regulated group — as Coinbase is — will mitigate risks in the eyes of European regulators at the ESMA level.
“I suspect regulators are concerned that a broker in Austria, for example, might seek to source liquidity from an American or South Korean exchange, typically requiring pre-funding that exchange with some of its clients’ assets,” Markova explained in an interview. “Consequently, if the exchange encounters difficulties, those client assets would be forfeited.”
Markova added that the current regulatory debate centers on defining the boundary.
“Logically, all entities eventually obtain their liquidity from outside the EU. The internal liquidity is insufficient, so it becomes a matter of the number of steps involved in accessing external liquidity,” she concluded.
