The European Securities and Markets Authority (ESMA) raises concerns about investor protection in the crypto industry by warning firms against manipulating their regulatory representations.
ESMA's Warning About Investor Risks
ESMA has cautioned crypto firms against misrepresenting the extent to which their products are regulated. This warning highlights a renewed effort by European regulators to tackle risks in the digital asset space. Under the Markets in Crypto-Assets (MiCA) regulation, which aims to streamline rules for digital assets and related services, investor protections include clear standards for asset custody and complaint resolution.
New EU Directives for the Crypto Industry
The European Union has introduced new guidelines for the cryptocurrency sector, requiring crypto firms to secure a CASP license from a national regulator. This license will serve as a passport, allowing companies to offer crypto services throughout all EU member states. ESMA has also issued regulations regarding the employment of staff in crypto firms, emphasizing the need for personnel to be knowledgeable and skilled in evaluating crypto services.
Criticism of Licensing Process in Malta
Recently, ESMA investigated Malta’s process for issuing licenses and found that the local financial authority did not fully evaluate the risks of a specific unnamed crypto company. While the Maltese regulator possesses the necessary knowledge and resources to approve and oversee crypto firms, its approval process met expectations only 'partially.' In response to these criticisms, the Maltese regulator stated that it takes pride in being one of the first to adopt digital asset rules.
European Union regulators are actively working to ensure investor protection in the crypto industry. The introduction of new directives aims not only to improve regulation but also to enhance the responsibility of crypto firms in providing their services.
