The EU’s financial watchdog has said that it will be looking at each initial coin offering (ICO) to determine whether they need to be regulated.
Outside the Regulatory Framework
The chair of the European Securities and Markets Authority (ESMA) made the comments yesterday. According to Steven Maijoor, he is determining how ICOs fit into the regulatory landscape. Additionally, he will be exploring the competition they present, reports Reuters.
Speaking to the European Parliament’s economic affairs committee, Maijoor said:
Some of these ICOs are like a financial instrument. Once it is a financial instrument it comes under a whole regulatory framework. The subsequent question is what do we do with those ICOs that are outside the regulatory world. We will assess that as a board. We expect to report by the end of the year.
Previously, the EU has largely taken a hands-off approach to ICOs. However, they have issued warnings about their potential risks to the public. Yet, Andrea Enria, chair of the European Banking Authority, said to lawmakers that:
Consumer warnings don’t seem to be sufficiently effective in raising awareness among consumers that there is a lack of safety net for these investments.
As a result, it appears that they are now following in the footsteps of the U.S. Last month, it was reported that regulators in the Canada, Mexico, and the U.S. were looking at 200 ICOs for possible fraud. Jay Clayton, chair of the U.S. Securities and Exchange Commission (SEC), has said that initial coin offerings are securities. As a result, they are subject to a regulatory framework.
The move from ESMA follows after calls for a clear-cut set of crypto regulations.
Early last month, Bruegel, a European Union economic think tank, called for general cryptocurrency regulations in the region. At the time, it was noted that it was in the EU’s best interests to introduce regulations.
More recently, France has introduced its own set of rules for ICOs. This is despite calls for unity in the EU. According to a tweet on the 12 September, Bruno Le Maire, the country’s Minister of Economy and Finance, said legislative framework governing ICOs was approved.
These are just a few instances, but they show that the EU is slowly shifting its position. With the ICO market blighted by fraudulent practices, measures need to be taken to protect investors. The only way to do this may be through regulation.
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