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Esma reiterates cryptoassets warning

Caution tapeEurope’s main securities regulator has repeated its warning on the danger of investing in unregulated cryptoassets.

The statement from the European Securities Markets Authority (Esma) was part of its ‘Trends, Risks and Vulnerabilities 2021’ report.

“Crypto-assets come in many forms but the majority of them remain unregulated in the EU,” states the report. “This means that consumers buying and/or holding these instruments do not benefit from the guarantees and safeguards associated with regulated financial services.”

Esma had issued a similar warning in February 2018 but felt compelled to repeat itself given that virtual currencies like bitcoin “continue to attract public attention” .

The regulator also referenced the European Commission’s proposal for a regulated cryptoassets market, published in September 2020 and known as the Markets in Crypto Assets (MiCA) framework.

However, investors “do not currently benefit from any of the safeguards foreseen in that proposal because it is not yet EU law” stated Esma.

The regulator’s statement coincides with one from a trade body covering the digital finance market warning of regulatory overreach from European supervisors when it comes to digital assets.

The statement from Global Digital Finance concerns amendments to the MiCA law suggested by European Parliament rapporteur Stefan Berger that the GDF believes will give the European Central Bank greater powers to regulate cryptoassets.

The worry for the GDF is that in seeking to manage the risk posed by global stablecoins, the EU’s approach is in danger of treating all digital assets the same, regardless of their relative risk.

The GDF’s head of regulatory affairs, Lavan Thasarathakumar, said: “It is important to remember that crypto assets are more than just stablecoins and we do not become blinded by this, losing sight of what is a great opportunity to create the truly all-encompassing regime that provides clarity to this innovative sector.”

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