Europe’s top markets watchdog said it could regulate some ICOs, but would decide whether it was able to or not on a case-by-case basis. Paris-based ESMA, observing a rapid growth in ICOs globally and in Europe, said many digital tokens could fall outside the regulated space, but depending on how they are structured, some ICOs may involve regulated investments.
Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), told the European Parliament’s economic affairs committee that “some of these ICOs are like a financial instrument. Once it is a financial instrument it comes under a whole regulatory framework.”
The European that investors may be unaware of the high risks that they are taking when investing in what has been a red-hot investing scene of late. Another key risk cited by the regulator stemmed from the fact that ICOs investors cannot benefit from the protection that EU laws and regulations provide.
However, the ESMA is largely limiting itself to taking enforcement actions against ICO operators at present, though the agency’s head said it might step up its regulation of the space more broadly in the nearest future.
“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,” Maijoor added.
Rules vary but all regulators are cracking down
Although It is hard to generalize the across Europe, but some major countries– including in France and Germany – have repeatedly called for more discussions on the topic.
Rules vary wildly by country because of the lack of pan-European legislation. But overall, local regulators across Europe are cracking down on trading venues that lack permission to offer brokerage services. In this context, ESMA has already proposed for retail investors, including lowering the maximum leverage that companies can offer.
The European Union has previously proposed that cryptocurrency service providers be brought under the scope of its anti-money laundering and countering terrorist financing regulations.
At the national level, the announced in April tax cuts on revenues generated by cryptocurrency transactions, reducing the high-band rate from 45 to 19 percent.
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