European Regulatory Chair Supports New Digital Asset Regulations
The chairman of the European Securities and Markets Authority (ESMA) — the European Union-level financial markets supervisor — has said that he supports further regulations on digital assets, political news outlet Roll Call reported on Feb. 27.
Delivering his speech at the FinTech Conference 2019 earlier this week in Brussels, Belgium, ESMA Chairman Steven Maijoor reportedly outlined the need to apply regulations to digital assets in order to help investors. He also expressed his support for expanding Europe’s Anti-Money Laundering (AML) requirements to include those involved in the exchange of one crypto asset to another, and not just the exchange between crypto and fiat currency.
Maijoor reportedly explained his stance, saying that “without new rules, digital assets will likely fall outside of the regulation of Europe’s securities laws.” Maijoor continued:
“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. […] This makes it plain to see that we cannot legally qualify crypto assets via a ‘one size fits all’ approach.”
In addition to digital assets, Maijoor proposed to extend new regulations to initial coin offerings (ICOs). Maijoor reportedly stated that most European jurisdictions support the idea that cryptocurrencies need proper regulation if they received profit or dividend rights, which makes them similar to traditional financial assets.
In October 2018, the ESMA announced that it was examining ICOs to see how they should be regulated. The ESMA reportedly assessed ICOs to see how they comply with the existing securities regulations on a “case-by-case” basis, in addition to investigating their impact on competition in the fundraising sector.
That same month, the Financial Action Task Force (FATF) adopted changes to its standards regarding digital currencies and firms involved in cryptocurrency-related activities. Per the changes, jurisdictions should ensure that virtual asset service providers — exchanges, wallet providers, and providers of financial services for ICOs — are subject to AML and counter-terrorism financing (CFT) regulations.