Two major European regulators, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have recently called for a ’common EU-wide approach’ to cryptocurrency regulations, in order to ensure investor protection.
According to a recently published report, the EBA has asked the European Commission to look into unified rules on cryptocurrencies, and noted cryptoasset activities aren’t currently falling under existing EU laws but are “highly risky” for investors.
As such, as first reported by CoinDesk, the regulator urged the Commission there’s a need for a “comprehensive cost/benefit analysis, taking account of issues inside and outside the financial sector, to determine what, if any, action is required at the EU level at this stage.” The regulator’s executive director, Adam Farkas, stated:
The EBA's warnings to consumers and institutions on virtual currencies remain valid. The EBA calls on the European Commission to assess whether regulatory action is needed to achieve a common EU approach to crypto-assets. The EBA continues to monitor market developments from a prudential and consumer perspective.
The EBA also asked the Commission to take into account the crypto-focused guidelines the Financial Action Task Force (FATF), the global anti-money laundering (AML) watchdog, is expected to issue this year. The EBA itself revealed it plans on monitoring the crypto sector.
The European Securities and Markets Authority (ESMA) also published a report on cryptocurrencies and initial coin offerings (ICOs). In it, it claims some cryptoassets could fall under the European Union’s MiFID financial framework and be considered financial instruments.
Steven Maijoor, ESMA’s chairman, noted some adjustments would have to be made as “existing rules were not designed with these instruments in mind,” which means “certain requirements are not adapted to the specific characteristics of crypto-assets.”
As for the cryptocurrencies that wouldn’t fall under MiFID, these would still have to comply with AML rules. To further protect investors, risk disclosure should be enforced to alert them of potential risks. Maijoor added:
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.
Meanwhile, as CryptoGlobe covered, the cabinet of the Irish government has approved a law to implement a new regime of financial regulations, a large part of which outlines regulations for the cryptoasset industry in the country.