The top French financial regulator has proposed to change the way the cryptocurrency industry is supervised in Europe.
Robert Ophèle, chairman of the Autorité des Marchés Financiers, he moved regulatory issues related to cryptocurrencies during the 5th edition of the Conference on FinTech and Regulation. The official argued that due to the enormous growth of the market, financial regulators must adopt a new approach in regulating blockchain-based financial instruments.
Ophèle proposed that the body responsible for this new area of regulation should be the European Securities and Markets Authority, or ESMA. He also stressed that the current regulations in the European Union would make it easier for ESMA to develop guidelines:
As this regulation is completely new, it is easier to ensure ESMA’s competence from the outset than if it were considered at a later stage. In addition, it would make sense to gather all the expertise under one authority as the cost of entering the world of cryptocurrencies is quite high.
What is ESMA?
Located in Paris, ESMA is an independent EU body focused on safeguarding the stability of the Union’s financial system by enhancing investor protection and promoting stable financial markets. In early 2018, ESMA issued a joint cryptocurrency warning, in which it stated that these are highly risky assets. The agency warned investors not to “invest money they cannot afford to lose.”
Ophèle also suggested creating a regulatory sandbox for token security. The official said the current regulations were holding back blockchain technology development because they were designed for centralized systems. Ophèle argues that the decentralized nature of blockchain could play a key role in the European economy:
DLT would reduce the risk, both by speeding up the market chain and by its fragmented nature, which could mitigate some of the cyber threats raised by centralized market infrastructures such as single point of failure […] It is also a question of maintaining Europe’s competitiveness while similar approaches are now being implemented in many countries.
the European Commission published its Markets in Crypto-Assets, or MiCA, regulations, in September 2020, providing a legislative regime for cryptocurrency markets. Major cryptocurrency companies, including ConsenSys, have voiced concerns about MiCA, warning that the new rules could overburden the industry with costly and complex requirements.