ESMA Chairman Supports Further Financial Regulations For Virtual Currencies
European Securities and Markets Authority (ESMA) chairman Steven Maijoor has indicated that he supports further regulations on digital currencies. Without the extension of current regulations, it is likely that cryptos can fall outside of the regulation of Europe’s securities laws.
At the FinTech Conference 2019 he Maijoor said:
“Where crypto-assets do not qualify as financial instruments, we are concerned that the absence of applicable financial rules leaves consumers exposed to substantial risks.”
He went on to warn that crypto-assets possess acute risk. He said:
“During 2017, the spotlight shifted to Initial Coin Offerings or ICOs. We saw substantial inflows to crypto-assets in general and ICOs in particular. ICOs have potential benefits as a new channel through which innovative businesses can raise capital. However, there are severe risks associated with many ICOs, as they operate at the fringes of the regulated world.
Alongside ICOs, many virtual currencies experienced a huge price bubble during 2017 and early 2018. This prompted ESMA to issue a Warning, together with the other European Supervisory Authorities (ESAs) as we were concerned about the speculation around these instruments.”
He goes to extensive lengths to say that EU policymakers should take a step in the direction of regulation of virtual currencies.
“EU policymakers should, therefore, consider ways to address the risks in a proportionate manner. As a priority, we advise them to extend the scope of AML rules to all these activities that involve crypto-assets. In particular, we agree with EBA that providers of exchange services between crypto-assets and crypto-assets (and not only between crypto-assets and fiat currencies) and providers of financial services for ICOs should be within the scope of AML/CFT obligations.”
He ended his speech by saying that the EU Innovation Network will bring together the national innovation hubs and regulatory sandboxes from the Member States to share best practices and promote regulatory and supervisory convergence for innovative businesses in the EU.
Because innovations are often global, ESMA will continue to actively cooperate with other regulators internationally