ESMA and EBA have published papers on ICOs and crypto-assets.
The ESMA paper clarifies which crypto-assets currently qualify as financial instruments and provides its views on gaps and risks. The paper identifies several of these:
- where assets do not fall within the scope of MiFID financial instruments, there are substantial investor risks. ESMA says that at the very least the EU should apply AML requirements to all crypto-assets and activities that involve them, and also require investor disclosures;
- where assets are within the current financial instrument definition, there are still a number of risks which mean that there is a potential need for interpretation or re-consideration of existing requirements. Differences in national interpretation stem from the fact the current requirements are not always easily aligned to the specific characteristics of crypto-assets.
ESMA sees potential advantages in both ICOs and the development of tokenisation, and in DLT generally, but only with appropriate safeguards in place. It calls for an EU-wide approach to future investor safeguards.
The EBA report focuses on the applicability and suitability of EU law to crypto-assets. It reaches similar conclusions to ESMA, including that the Commission should carry out an analysis to determine an appropriate EU-level response. It also notes several actions it plans to enhance monitoring of regulated entities’ activities and customer disclosures in crypto business.