A new positive twist to cryptocurrency regulations in Europe could be seen as a regulatory chief supports new crypto rule to prevent substantial risk to consumers.
Application Of Financial Instrument Regulation To Cryptos
Steven Maijoor, the chairman of the European Securities and Markets Authority, said that he supports the application of financial instrument regulation to assets such as Bitcoin to protect crypto investors. He also continued, saying that without these new rules, digital assets would likely fall outside of the European Securities laws.
In Maijoor’s opinion, while delivering a speech at Fintech Conference, 2019 held at Brussels, he mentioned that where crypto assets do not qualify as financial instruments, regulators are concerned that the absence of applicable financial rules leaves the consumers exposed to substantial risks.
Meanwhile, his statement on crypto regulations follows reports by ESMA and another European regulator that suggests the creation of a bespoke regime for crypto assets.
Further, Maijoor wants initial coin offerings regulated and where organizations raise cash in return for digital tokens or coins that can be used to make future purchases and may fluctuate in value.
Also, the European jurisdiction as noted by Maijoor has agreed that crypto assets should be regulated if they have attached profit or dividend right to make them similar to traditional financial instruments. Also, he supports the expansion of the European Money Laundering requirements to include those involved in the exchange of one crypto asset for another and not just the exchange of one for fiat currency.
Maijoor finally notes that the utility and consumption rights among others which cryptos feature make the job of regulators difficult. This makes it plain to see that crypto assets cannot be legally viewed from a one size fits all approach.
Crypto Regulations Adoption
Regulation for the crypto industry has become a major goal for countries as they seek to annex the dividend of the industry for their citizens and country’s development.
In recent time, regulators in the U.S. have also been considering questions on crypto assets that do not fall into the existing financial categories. For example, states in the U.S. vary on whether they require virtual currency companies to have money transmission licenses, while direct cryptocurrency transactions are unregulated by the federal government in as much they don’t constitute fraud.
Also, the subject of initial coin offerings being security has no consensus in the U.S., though regulators have taken actions when investors have looked to them as a speculative investment.
Providing appropriate regulations for the crypto industry would make it thrive more and make it safer for investors.