EU Regulators Could Reduce Regulatory Pressure on Cryptos if a Bitcoin ETF Sees Approval


Bitcoin (BTC) could soon receive good news if it the first crypto exchange-traded fund (ETF) receives approval from the U.S. Securities and Exchange Commission (SEC). In general, cryptocurrencies operate in legal grey zones and regulatory agencies did not find the proper way to control them.

During the last years, several hacks and attacks on cryptocurrency platforms harmed the whole industry. One of the examples is what happened with Mt. Gox, that lost millions of dollars in Bitcoin back in 2014. Due to these attacks, governments have been trying to ban trading activities or at least, highly regulate them.

The European Securities and Markets Authority (ESMA) has recently released a report in which they address cryptocurrency regulations and how local agencies could do to improve the market.

According to the European financial advisory group, cryptocurrencies could be a threat to investors and market integrity in the continent. Some of the issues that regulators are analyzing are volatility, fraud, money laundering or market manipulation. They have also considered attacks experienced by trading platforms.

Another thing mentioned is related to liquidity. For them, investors that have positions in virtual currencies have limited options to cash out their funds. The report reads as follows:

“These issues are not unique to crypto assets trading platforms they may be exacerbated in the case of crypto-assets because of their high price volatility and often low liquidity.”

Additionally, the report recommends local governments not to legalize cryptocurrencies because they are not financial instruments. The ESMA is also asking for a global approach to regulate these assets.

There are different companies and exchanges in the crypto world that are starting to move forward and promote digital assets in a much better way. For example, the Winklevoss Twins, the owners of the Gemini exchange, have been making positive media campaigns about virtual currencies and the crypto space as a whole.

At the same time, they are one of the most regulated exchanges in the United States and the whole market.

The challenges and issues that were reported by the ESMA are the same as the U.S. SEC mentioned about the crypto market earlier this year. The SEC rejected several ETFs due to these issues and is expecting the market to solve these points as soon as possible.

Cryptocurrencies and the crypto market need to improve and offer better services. Liquidity should grow, companies should have better KYC and AML procedures, security must be enhanced, etc.

If the SEC ends up approving a Bitcoin ETF, the ESMA would have to review its stance towards digital assets and change or modify its position. The SEC would only be approving a crypto-related ETF if these strict conditions are met. Thus, the ESMA could ease its position and reduce the pressure on the market.

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