EU Officials to Discuss Crypto Regulations

EU officials to discuss crypto regulations, according to some of the online reports. It is known that the upcoming meeting’s the draft note outlines that the EU ministers will hold a discussion regarding a general lack of transparency. 

30 August, AtoZ Markets Ministers of economic and financial affairs from 28 member nations of the European Union (EU) are reportedly set to hold an informal meeting concerning the challenges posed by digital assets and the possibility of tightening regulations. 

EU Officials to Discuss Crypto Regulations

According to a number of online reports, the draft note outlines that the EU officials will hold a discussion regarding a general lack of transparency. They are also supposedly about to discuss the dangers of potential cryptocurrency use for tax evasion, money laundering, and terrorist financing. The meeting is supposed to take place in Vienna, Austria.

The European Securities and Markets Authority (ESMA) has earlier warned customers about Initial Coin Offerings (ICOs). In November 2017, AtoZ Markets reported that the European watchdog has observed a rapid growth in ICOs globally. 

According to ESMA’s statement, ICOs are risky and highly speculative and investors ran a “high risk of losing all of their invested capital”. Additionally, firms using ICOs, meanwhile, may conduct their activities without complying with relevant applicable EU legislation, the watchdog said. According to ESMA statement:

“The price of the coin or token is typically extremely volatile and investors may not be able to redeem them for a prolonged period. Another key risk stems from the fact that, depending on how they are structured. ICOs are also vulnerable to the risk of fraud or money laundering.”

EU Fifth Anti-Money Laundering Directive

The pan European regulator has also highlighted that unregulated exchanges are unprotected since they exist outside global financial regulations. This implies that potential customer losses would not be covered under the EU law. 

In spite of the previous warnings from the EU regulators, online reports stated that “have established an effective and efficient way to raise capital.” Reportedly, ICOs have the potential to aid the integration of the capital markets in the EU. 

Earlier this July, the EU Fifth Anti-Money Laundering Directive came into force. The directive provides a new set of guidelines for the European financial supervisors to regulate digital currencies. The new framework contributes to better and stricter transparency requirements that are aimed at the use of “anonymous payments through prepaid cards” and “virtual currency exchange platforms” for the purposes of money laundering or terrorist financing.

Crypto CFDs Rules

This March, the ESMA has tightened requirements for Contracts For Differences (CFDs) in cryptocurrencies.

The EU supervisor decided to set out 30:1 leverage for CFDs on major Forex pairs, with non-major currency pairs and gold to be traded at 20:1, while other commodities and non-major indices will be given a 10:1 gearing. Likewise, ESMA laid out a 5:1 leverage for individual equities and 2:1 leverage for cryptocurrency trading.

As per the introduced rules, investors must possess enough funds to cover at least half of a contract value upon opening. 

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