EU Financial Body Advises ESMA to Regulate Cryptocurrencies Under Current Rules


October- 24, 2018 | AtoZ Markets

The Securities and Markets Stakeholders Group (SMSG) has recommended depending the currently existent financial rules to regulate cryptocurrency ICO tokens.

SMSG, reportedly being an advisory body to the EU’s securities watchdog- the European Securities and Markets Authority (ESMA), sees in its report dated Oct. 19, that as transferable crypto assets used in payments like Bitcoin is being invested in increasingly, the risks of using it are similar to those in the capital markets.

ESMA’s Guidelines Need Clarification

Based on the aforementioned assumption the advisory group inferred, the latter recommended in its report that ESMA should consider digital assets under the EU’s MiFID II (Markets in Financial Instruments Directive II) regulations, which came into force in January.

“This is however not in ESMA’s power, since it would require a change in the Level 1 Text of MiFID II, so the SMSG can only urge ESMA to consult with [the European Banking Authority] on this matter and take this up with the European Commission”, said the report.

If an asset token gives the right to a financial entitlement, it has features of either bonds or shares,

According to the report as well, if an asset token gives the right to a financial entitlement, it has features of either bonds or shares,

The SMSG group stressed in its report as well that the ESMA should clarify in its guidelines the MiFID definition of “transferable security”, as well as whether transferable asset tokens that give right to a financial entitlement should be considered as MiFID transferable securities.

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