Negotiations are underway, but the hard fights over ESMA’s powers, tokenisation, and national sovereignty are only just beginning.
The European Commission’s Market Integration and Supervision Package was published on December 4 2025, and Brussels has been debating it ever since. The package sits at the heart of the Commission’s Savings and Investments Union strategy, which aims to establish a truly integrated EU capital market, but which has eluded successive Commissions for years. At over 1,000 pages, it represents the most substantial single-market integration move in EU capital markets since MiFID II and MiFIR.
The stakes are unusually high. France, Germany, Italy, the Netherlands, Poland and Spain wrote to EU institutions just last week, urging agreement on the package by summer 2026, a tight deadline that reflects both the political urgency and the pressure from the largest economies. Meanwhile, the tokenisation of financial assets is accelerating around them: the regulatory framework the EU builds now will determine whether it captures that opportunity or watches it happen elsewhere.
Where Parliament stands
Negotiations in the European Parliament are being shaped by key rapporteurs who are leading different components of the package. Markus Ferber (EPP, Germany) is responsible for the Master Regulation, Eero Heinäluoma (S&D, Finland) for the Master Directive, and Giovanni Crosetto (ECR, Italy) for the Settlement Finality Regulation (SFR).
The indicative parliamentary timetable foresees a public hearing in early May, draft reports delivered in mid-June, and an amendment deadline of July 16. Committee votes in ECON are expected in the first week of December. None of this is confirmed, and given the complexity and scope of the package, the process could easily stretch into 2027, with implementation potentially not landing until 2027–2029.
The Master Regulation: what changes for whom
The Master Regulation is the operational centrepiece of the package. It amends a long list of existing EU legislation, touching EMIR, MiFIR, CSDR, SFTR, MiCA, and the ESMA Regulation itself.
The most politically charged element is ESMA’s expanded role. ESMA has welcomed the package, noting that it directly addresses fragmentation stemming from divergent national rules and supervisory practices. The Commission proposes granting ESMA direct supervisory powers over major cross-border infrastructure and crypto-asset service providers, a significant centralisation of oversight that has divided Member States.
EFAMA, representing the asset management industry, broadly supports the package but has raised concerns about a proposal for ESMA to conduct annual reviews of large asset managers, warning that this could allow ESMA to second-guess national supervisory decisions and introduce legal uncertainty for firms under review.
On crypto specifically, the package proposes transferring authorisation, monitoring, and supervision of all crypto-asset service providers from national authorities to ESMA via a new chapter in MiCA. However, firms offering crypto services as a secondary activity would remain under national supervision.
The regulation also introduces common ESG definitions and standards for green bonds and ESG ratings, a long-overdue move to give the EU’s sustainable finance framework greater credibility and reduce greenwashing risk.
The Master Directive: convergence in practice
The Master Directive focuses on achieving supervisory convergence across UCITS, AIFMD, and MiFID II. It is less headline-grabbing than the regulations, but commercially significant for asset managers and investment firms operating across borders.
The direction of travel is towards more uniform interpretation and enforcement of rules that currently vary substantially between Member States. For cross-border fund distribution, that means less friction and lower costs. For firms that have built compliance models around national divergences, some adjustment will be needed.
Settlement Finality: DLT enters the mainstream
The conversion of the Settlement Finality Directive into a directly applicable regulation is one of the package’s more technical but genuinely important elements. The update clarifies that settlement finality rules apply to DLT-based systems, providing the legal certainty that has been missing for blockchain-based settlement and clearing infrastructure. Amendments to the Financial Collateral Directive confirm that cryptographic instructions recorded on DLT are covered, reducing uncertainty for collateral arrangements involving tokenised assets.
The ESMA question: political trade-off, not technical detail
The central tension in the negotiations is not about EMIR thresholds or UCITS passporting rules. It is about sovereignty. Stronger ESMA powers mean less room for national regulators to apply their own judgment, something several Member States are reluctant to accept, even as they acknowledge the fragmentation problem those same supervisors have created.
Six of the EU’s largest economies have explicitly backed a central purpose of the package: removing national barriers and improving cross-border fund distribution so investors get better access to EU capital markets and companies benefit from deeper pools of capital. But the letter of support is not the same as agreement on the details, and the ESMA supervisory perimeter will be one of the most contested issues in both Parliament and Council.
Tokenisation: happening with or without the regulation
The package’s digital finance provisions are being shaped by a market that is not waiting for Brussels.
Nasdaq announced on March 9 2026, a partnership with Kraken to develop an equities transformation gateway, enabling tokenised versions of Nasdaq-listed stocks and ETFs to be distributed to investors outside the United States, particularly in Europe. The system is expected to become operational in the first half of 2027, pending SEC approval. The initiative is US-focused, but it illustrates the pace of change that EU policymakers are trying to keep up with.
Within the EU, the DLT Pilot Regime has allowed experimental blockchain-based settlement of financial instruments since 2023. The package proposes to build on that foundation, embedding technology neutrality into the settlement finality framework and enabling regulated DLT-based market infrastructure at scale.
Why this matters
The MISP is the Commission’s attempt to answer a question that has haunted European capital markets for two decades: can the EU build a genuinely integrated market, or will national interests and regulatory divergence always win? The political moment, post-Draghi report, with competitiveness anxiety running high, gives the reform unusual momentum. Whether that translates into a strong final text or gets diluted over potentially 18 months of trilogue remains to be seen.
How we can help
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As negotiations progress, staying informed and strategically positioned will be essential to navigate the evolving regulatory landscape.