Cryptocurrencies have become the most well-known applications of the promising blockchain technology and these disintermediated digital currencies have put significant power in the hands of the people. A group that advises the European Securities and Markets Authority (ESMA) – the EU’s securities have suggested controlling regulation of cryptocurrency and ICO tokens under current monetary rules. However, it stated that it needs a lot more explanation.
As per a recent report, the Securities and Markets Stakeholders Group (SMSG) mentioned that, since convenient crypto assets used in payments (such as bitcoin) are gradually rising it is considered as investments, the associated dangers are very analogous to those seen in the wealth markets. It, therefore, suggests that the ESMA must recognize such assets under the EU’s MiFID II.
As demand for regulation of cryptocurrency grows many regulators are thinking how to keep up. The 36-page report, published in the month of October, recognizes that various types of crypto-tokens have dissimilar purposes and must have different legal definitions. However, it recognizes that crypto-assets “might also provide innovation in the field of finance” despite presenting a possible risk to financial stability.
The SMSG stated the ESMA must explain the MiFID definition of “transferable security” in the guidelines, but if an asset token cannot be transferred the SMSG further stated that there is no need for regulation as mentioned in Finance Magnates.
Regulation of cryptocurrency in all countries in the union has a somewhat different method to cryptocurrency. In January, ESMA enacted an update to the union-wide financial law – MiFID II – that levies strict restrictions on the processes of foreign exchange firms. The report stated in favor of the creation of national sandboxes and revolution hubs for token-based startups. However, as noted in CoinDesk, it recommended that the ESMA must guarantee adequate excellence, clarity and legal security of nationwide creativities. The counseling trails report in October that the ESMA was even seeing whether to control initial coin offering (ICO) tokens as safeties on a case-by-case basis[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]