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Cryptocurrency- Legal Framework for EU in 2020


Cryptocurrency regulation is one of the key focus areas for the European Securities and Markets Authority (ESMA) for the next couple of years. The ESMA has announced plans for a new legal framework governing the cryptocurrency sector, as one of its foremost priorities for 2020.

The plans were set out in the authority’s 2020-22 Strategic Orientation, which flagged the growing impact of financial technology and digitalisation on markets. In the report, the authority said it wanted to educate market participants in these risks, as crypto-assets become ever more mainstream. ESMA said that it will actively look into the new opportunities blockchain technology might bring especially for investor protection and share expertise and know-how with national authorities.

Stemming Cyber-threats

“ESMA will [..], together with NCAs, also require EU market participants to acknowledge the risks that may stem from digitalisation by ensuring business continuity and the use of adequate and up-to-date technology, as well as adequate protection against cyberthreats, and through proper data protection and data quality management.”

The agency has already implemented frameworks around crypto derivatives and initial coin offerings (ICOs). However, the latest plans would seek to develop a unified “sound legal framework” for operators within the sector, in a bid to reduce these risks—to investors, to businesses and to the stability of capital markets in the region.

A legal framework operating throughout Europe would benefit legitimate operators, many of whom are supportive of clear, effective regulation and licensing for cryptocurrency businesses.

The authority will now work to achieve convergence throughout the EU, with the ultimate goal of creating a unified system of crypto regulation across the trading bloc.

Steven Maijoor, chair of ESMA, said authority would focus on creating a level playing field for crypto companies operating across Europe: “ESMA can look back on a successful first nine years that has included the development of the Single Rulebook and establishing itself as a credible supervisor of CRAs and TRs.”

“One of our key priorities is ensuring the consistent and coherent implementation of the Single Rulebook and, with our new powers in this area, we will adopt a risk-based approach, in cooperation with national authorities, to supervisory convergence across the EU”
– Steven Maijoor, chair of ESMA

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