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ESMA calls for common approach on cryptocurrencies

 

The European Securities and Markets Authority (ESMA) has identified certain gaps and issues in the existing EU financial regulatory framework for cryptocurrencies and considers that further measures need to be taken in the sector to ensure investor protection. This became clear from ESMA’s Advice to EU Institutions (Commission, Council and Parliament) on initial coin offerings and crypto-assets published on Wednesday.

 

ESMA’s move comes as a result its cooperation with National Competent Authorities (NCAs) of EU Member States on analyzing the business models of crypto-assets, the risks involved and potential benefits that they may introduce, in the context of the existing regulatory framework. 

 

The document published outlines two main problems with cryptocurrencies. In the first place, although some crypto assets do qualify as MiFID financial instruments, the requirements applicable to the are not adapted to the specific characteristics of those assets, and NCAs have difficulty in interpreting these regulations. Second, a number of crypto-assets fall outside the current financial regulatory framework, which, of course, poses substantial risks to investors.

 

Commenting on the matter, Steven Maijoor, Chair of ESMA, said: “In order to have a level playing field and to ensure adequate investor protection across the EU, we consider that the gaps and issues identified would best be addressed at the European level.”

 

ESMA’s Advice allows the EU Institutions to consider possible ways in which those problems with crypto assets may be addressed and subjected to further analysis. This would most likely require amendments to the Markets in Financial Instruments Directive (MiFIR), Level 1 legislation and related Level 2 provisions.

 

TAGS: ESMA  cryptocurrency  EU  regulation 
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