Two major European regulators have separately called for cryptocurrency and ICO rules at the EU level.
Firstly, the European Banking Authority (EBA), a regulatory agency of the EU, has urged the European Commission to examine whether unified crypto rules are needed across the region.
In a report published Tuesday, the EBA said that crypto asset-related activities do not currently fall under existing EU financial laws and, as these activities are “highly risky”, appropriate rules need to be put in place to protect investors.
The EBA has, therefore, asked the commission to carry out a “comprehensive” analysis to determine what action may be required at the EU level.
Adam Farkas, the EBA’s executive director, said in a statement:
“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 advised the commission to take into account recommendations to be issued by the Financial Action Task Force (FATF), the global money-laundering watchdog, in June of this year.
The FATF is expected to issue guidance for international cryptocurrency regulation covering crypto exchanges, digital wallet providers and initial coin offerings (ICOs).
Meanwhile, throughout 2019, the EBA said it will take a number of steps to monitor the crypto sector, such as developing a common monitoring template for crypto activities, assessing business practices regarding advertisements in the industry, determining the treatment of banks’ holdings or exposures to crypto assets, and more.
A second regulatory agency in the economic bloc, the European Securities and Markets Authority (ESMA), also published a report on crypto assets and ICOs today. It advises the EU’s Commission, Council and Parliament on the existing rules that could be applied to crypto assets and further sets out any regulatory gaps to consider for policymakers.
Notably, it says that some crypto assets could fall under the EU’s MiFID financial framework and be classed as financial instruments, although some adjustments may be required.
Steven Maijoor, ESMA chair, said:
“Our survey of NCAs highlighted that some crypto-assets may qualify as MiFID financial instruments, in which case the full set of EU financial rules would apply. However, because the existing rules were not designed with these instruments in mind, NCAs face challenges in interpreting the existing requirements and certain requirements are not adapted to the specific characteristics of crypto-assets.
Another category of cryptos would not fall under MiFID, but should still have to comply with anti-money laundering rules. Additionally, risk disclosure should also be enforced, to alert consumers to potential risks when investing in crypto assets, it said.
“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”, Maijoor concluded.
