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EU regulator issues dire warning on crypto

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TL;DR

  • Verena Ross, the chairperson of ESMA, emphasized the risks associated with cryptocurrencies and stated that the EU would not tolerate forum shopping within the crypto sector.
  • Ross also reminded consumers that, despite the implementation of MiCA, no crypto-asset can be considered entirely safe.
  • MiCA is set to come into effect in 2024 and aims to enable wallet providers and exchanges to operate across all 27 EU member states with a single license.

The European Securities and Markets Authority (ESMA) has issued a warning to the cryptocurrency industry following the release of its initial proposals for the Markets in Crypto-Assets (MiCA) regulation. The proposed regulations primarily focus on conflict-of-interest rules and the handling of customer complaints by crypto-asset service providers (CASPs). Verena Ross, the chairperson of ESMA, emphasized the risks associated with cryptocurrencies and stated that the EU will not tolerate forum shopping within the crypto sector.

ESMA aims to ensure that entities involved in crypto-asset activities understand that the EU is not a jurisdiction that can be exploited for regulatory arbitrage. Ross also reminded consumers that, despite the implementation of MiCA, no crypto-asset can be considered entirely safe. 

The proposal document, titled “Technical standards specifying certain requirements of MiCA regulation,” has been released for consultation, allowing the crypto industry to provide feedback on the regulatory framework. The consultation period extends until September 20, when crypto companies are asked to share confidential information about their expected revenue.

EU on crypto

ESMA’s warning was prompted by recent incidents in the crypto world, including the collapse of crypto firms that resulted in the misuse of clients’ funds and crypto assets. Additionally, the regulator highlighted media reports of hacking attacks targeting CASPs, which often led to the theft of substantial amounts of customer crypto assets.

MiCA is set to come into effect in 2024 and aims to enable wallet providers and exchanges to operate across all 27 EU member states with a single license. The regulation intends to create a standardized and harmonized framework for crypto-related activities within the EU, promoting consumer protection and market integrity. By establishing consistent rules and requirements for CASPs, MiCA aims to mitigate risks associated with cryptocurrencies and enhance investor confidence in the market.

The release of these proposals and ESMA’s warning signal a growing recognition by European regulators of the need for comprehensive regulations to govern the rapidly evolving crypto industry. As cryptocurrencies gain popularity and attract increased attention from consumers and investors, authorities are taking steps to address potential risks and protect market participants

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Lacton Muriuki

Lacton is an experienced journalist specializing in blockchain-based technologies, including NFTs and cryptocurrency. He dabbles in daily crypto news rich with well-researched stats. He adds aesthetic appeal, adding a human face to technology.

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