The European Securities and Markets Authority (ESMA) has just released a report identifying ‘gaps’ in regulation for the cryptocurrency space. The areas discussed include crypto-asses, ICOs, and distributed ledger technology.
ESMA has just put out a report titled Licensing of FinTech Business Models which surveys national competent authorities (NCAs) on the licensing of fintech firms. Conducted by ESMA, the survey found that most NCAs do not differentiate between fintech and traditional businesses. The main focus, ESMA says, is in the realm of cryptocurrencies where regulation is sorely lacking.
The report reads:
“The primary area where regulatory gaps and issues have been identified by NCAs and where FinTech firms do not fit neatly within the existing rules is related to crypto- assets, ICOs and DLT. NCAs called for more clarity at the EU level with respect to the definition of financial instruments and the legal nature of crypto-assets.”
The ESMA also made clear that some crypto-assets should be considered as “financial instruments” and subject to full regulation. These regulations would cast these assets as “security tokens,” a topic hotly discussed among European regulators today. Other crypto-assets, like Bitcoin, will require some “minimal level of regulation.”
Aside from cryptocurrencies, ESMA also made clear that more regulation is needed in the areas of cybersecurity and cloud outsourcing. As of now, ESMA has not put out any specific recommendations, just the conclusions of its survey.
“In line with the conclusions of the EBA and EIOPA, ESMA does not put forward any specific recommendations to the EC on a need to adapt financial services legislation at this stage. Nonetheless, further considerations may be needed to further adapt the EU legislative framework to emerging innovations.”
On July 21st, the European Union Prospectus Regulation will go into effect which will have a significant impact on STO crowdfunding. 2019 is expected to be a strong year for the security token industry in Europe.
Do you believe that the European Union will adopt more crypto-friendly legislation for security tokens by year’s end? Let us know your thoughts below.
Image courtesy of Finance Magnates.