European Financial Watchdog To Examine ICOs Case By Case

ICO News, News | October 9, 2018 By:

The European Securities and Markets Authority (ESMA) is examining initial coin offerings (ICO) to determine whether it should be regulated.

Steven Maijoor, chair of the ESMA, told the European Parliament’s economic affairs committee that the authority is assessing ICOs to see how they comply with the existing securities regulations on a “case-by-case” basis, and how they affect competition in the wider capital raising sector.

“Some of these ICOs are like a financial instrument,” Maijoor said. “Once it is a financial instrument it comes under a whole regulatory framework. The subsequent question is what do we do with those ICOs that are outside the regulatory world. We will assess that as a board. We expect to report by the end of the year.”

At present, EU regulators are limiting themselves to taking enforcement actions against ICO issuers and issuing warnings to retail investors about risk associated with crypto assets. Some regulators believe that this kind of approach may not be enough.

Andrea Enria, chair of the European Banking Authority, considered allowing ICOs to develop without a set of specific EU rules, but he said “this is not working as expected.”

“Consumer warnings don’t seem to be sufficiently effective in raising awareness among consumers that there is a lack of safety net for these investments,” Enria said.

The news came after ESMA revealed last week that it was budgeting more than €1 million ($1.15M USD) to monitor FinTech and cryptocurrency activities during 2019. The goal is to gather and develop metrics that will guide the authority in determining when and where ESMA will employ its own product intervention powers.