EU watchdog taking a closer look at ICOs

The European Union’s securities watchdog is now examining every initial coin offering (ICO) to see whether it should be regulated.

The move echoes its U.S. counterpart’s approach to the asset class. Until now, EU regulators have only issued warnings but feel that this may not be enough.

Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), said he was examining how ICOs fit into existing regulation.

They are also looking at how they affect competition in the wider capital raising sector, with ESMA and national regulators in the EU assessing which ICOs come under existing securities rules on “case-by-case” basis.

Speaking to the European Parliament’s economic affairs committee, Maijoor 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.”
In a recent interview with RegTech Analyst, two executives said there is no perfect solution and approach to regulating the cryptocurrencies market.

However, one of the crypto executives used the example of ‘the best possible way’ is being applied in Japan. The country’s primary financial regulator has dramatically increased its screening process of applicants registering to open cryptocurrency exchanges, according to a local report.

With the risks associated, regulators from around the world have struggled to get to grips with the asset class’ regulation. Different countries have taken different approaches, some have outrighted banned the asset classes, others have begun discussing how best to regulate them.

In the US, the United States Securities and Exchange Commission (SEC) has begun a number of cryptocurrency investigations, resulting in fines and lawsuits. However, despite industry leaders participating in a roundtable discussion in the US Congress last month, the country is yet to formalise a plan.

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