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The European Securities and Markets Authority (ESMA) is to examine Initial Coin Offerings (ICOs) to determine how they should be regulated.
Case-by-case basis
ESMA was established in 2011 in Paris to develop a common rulebook for European Union (EU) financial markets and supervise them, and works with the other European Supervisory Authorities in the field of banking, insurance and occupational pensions. Reuters reported that ESMA is assessing ICOs to see how they comply with the existing securities regulations on a case-by-case basis, as well as their impact on competition in the fundraising sector. Steven Maijoor, chair of the ESMA, said that ICOs have had difficulty showing their viability and what extra benefits they bring compared with traditional capital raising. Mr Maijoor explained, ‘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.’
Not as expected
Andrea Enria, chair of the European Banking Authority, said that he considered allowing ICOs to develop without a set of specific EU rules but, ‘this is not working as expected.’ He added, ‘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.’ The 2019 annual work program of ESMA has been allocated 1.1 million euros, to include the regulation and supervisory treatment of new financial activities, focusing on fintech and crypto assets.
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