Bitcoin ETF Approval Could Ease EU Regulators Concerns About Crypto
European Authority Concerned About Crypto Per Forbes, the European Securities and Markets Authority (ESMA), the E.U.’s in-house financial agency based in Paris, recently issued an in-depth report on “crypto-assets.”
In the 49-page primer on how the region’s regulators should address digital currencies, ESMA outlined current issues with the underlying crypto market.
Although the document was lengthy, a theme became quickly apparent. The European financial advisory group explained that cryptocurrencies, like Bitcoin, could pose notable threats to investor protection and market integrity.
Via the report, the ESMA explained that it currently sees an array of pertinent issues with the industry itself.
Most notably, the organization drew attention to market volatility, fraud, money laundering, market manipulation, and multi-million dollar cyber-attacks.
ESMA’s analysts and researchers also explained that liquidity in a majority of cryptocurrency markets is shallow, meaning that investors often have “limited possibilities” to cash out of their positions if the worse comes to worst.
The detailed report explained: “These issues are not unique to crypto assets trading platforms they may be exacerbated in the case of crypto-assets because of their high price volatility and often low liquidity.”
Keeping these apparent imperfections in mind, the ESMA advised local governments to abstain from formally legalizing this asset class. Moreover, the E.U.-backed body went on to warn prospective investors of cryptocurrencies to stave away from making such a play, making it clear that digital assets aren’t sound financial instruments. And as such, the ESMA went on to call for a universal regulatory approach, which could accentuate crypto and related technologies’ benefits, while mitigating underlying flaws.
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