As reported by Reuters on October 8th, European securities regulator, ESMA is studying ICOs to determine how they should be regulated. This is the first time that ESMA is actively looking towards ICOs for a possible regulation mirroring its US counterparts.
Steven Maijoor, the chairperson of the ESMA said that they are currently examining how ICOs fit in the existing regulations how they are going to affect competition in the wider capital raising sector. According to Reuters, the national regulator is examining ICOs on a case-by-case basis to see how they comply with the existing regulatory framework.
Maijoor while addressing the European Parliament’s economic affairs committee said:
“Some of these ICOs are like a financial instrument. Once it is a financial instrument it comes under a whole regulatory framework. 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 also said that the current structure of the ICOs have a difficult viability structure and is examining what additional benefits can be reaped as compared to the traditional capital raising.
Andrea Enria, chair of the European Banking Authority also let know the lawmakers that, he was trying to let innovations like ICOs grow without the specific EU rules but the desired result is not showing up. Currently, the EU regulators have restricted themselves to only issue warnings to retail investors but this measure is not enough
“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,” Enria said.
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