ESAM Chairman, Steven Maijoor said they were examining how ICOs will fit into the existing regulations. They also analyzed how they will affect the fundraising sector in general. Regulators are assessing which ICOs come under existing securities rule one at a time.
This decision by EU regulators comes less than a week after ESMA set aside €1 million as a budget to monitor cryptocurrencies and other Fintech activities for the next year. Maijoor told the Economic Affairs Committee,
Some of these ICOs are like a financial instrument. Once it is a financial instrument it comes under a whole regulatory framework. He also adds, 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.
ICOs, in general, have had “difficulty’ showing their true potential and their extra benefits. Relatively in comparison to traditional capital raising, Maijoor reported.
EU regulators had been giving warnings with risks involved in ICO investment, but so far it seems to have fallen on deaf ears. Andrea Enria, chair of the European Banking Authority told,
This is not working as expected. Consumer warnings don’t seem to be sufficiently effective in raising awareness among consumers that there is an insufficient safety net for these investments.
The plans to regulate these ICOs still exist. The regulators are wondering if they should mirror the move by the US counterpart, and treat ICOs as securities.
ESMA’s objective for the upcoming year is to “achieve a coordinated approach to the regulation and supervisory treatment of new or innovative financial activities.”
ESMA and national regulators have their work cut out for them. They expect these regulations revolving ICOs to be ready by the end of this year.
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