The European Securities and Markets Authority (ESMA) has launched a new supervisory review to examine how crypto firms across the European Economic Area protect customer assets and manage operational risks.
The review, known as a Common Supervisory Action (CSA), will focus on Crypto-Asset Service Providers (CASPs) that offer custody services. National regulators will assess selected firms from the second half of 2026 through the first half of 2027, with a final report expected in late 2027.
👮 EU regulator ESMA is launching a dedicated review process for crypto custody providers. pic.twitter.com/mRs1DxdiQR
— WAGMI Intel 📰 (@Wagmi_Intel) July 8, 2026
ESMA said the exercise will examine how crypto firms manage risks tied to digital asset custody and blockchain infrastructure. The review will cover governance, private key management, transaction controls, incident detection and response, smart contract risks, and the use of third-party service providers. Regulators will also assess how firms secure digital assets built on distributed ledger technology (DLT).
The exercise will be carried out by national competent authorities using a risk-based sample of authorized CASPs. ESMA said the initiative is intended to improve supervisory consistency as Europe’s crypto market continues operating under the Markets in Crypto-Assets (MiCA) framework.
Why is crypto custody getting more regulatory attention?
Crypto custody has become one of the industry’s biggest regulatory concerns because providers control customers’ private keys and digital assets. Weak security measures, operational failures, or cyberattacks can expose users to major losses even when markets remain stable.
European regulators have increasingly focused on custody standards after several global crypto firms suffered hacks, security breaches, and operational failures over the past few years. Those incidents pushed policymakers to place greater attention on internal controls rather than limiting oversight to financial reporting and capital requirements.
Will stronger custody rules build confidence in Europe’s crypto market?
Europe has already introduced MiCA to create common rules for crypto businesses across the region. This latest review shows regulators are now moving from writing rules to checking whether firms are following them in practice.
For crypto companies, passing these reviews could strengthen their standing with customers and institutional partners. Firms with weak operational controls, however, may face pressure to improve security systems and internal processes as regulatory oversight becomes more hands-on.
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