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EU Watchdog Will Evaluate ‘Every’ ICO for Potential Regulatory Push

Last Updated March 4, 2021 3:47 PM
Habiba Tahir
Last Updated March 4, 2021 3:47 PM

The European Securities and Markets Authority (ESMA) is assessing every single ICO operating within its jurisdiction, Reuters reported  on Oct. 8.

ESMA chair Steven Maijoor — who warned crypto investors in Jan. 2018 that they could potentially lose all of their funds by investing in initial coin offerings (ICOs) — said that he had been observing the current regulations that can fit an ICO.  He added that, so far, these ICOs have been unable to reveal their “extra benefits” when compared with traditional capital raising companies.

Maijoor explained to the EU’s Committee on Economic and Monetary Affairs that some ICOs are similar to financial instruments and in turn could be subject to regulations.

“The subsequent question is what do we do with those ICOs that are outside the regulatory world. We will assess that as a board. We expect to report by the end of the year,” said Maijoor.

Meanwhile, the European Commission’s Vice President, Valdis Dombrovskis, said in the EU Economic and Financial Affairs Council (ECOFIN) meeting last month that cryptocurrencies are here to stay. He added that crypto market would grow despite volatility in cryptocurrencies.

In Dec. 2017, Dombrovskis sent letters to ESMA, European Banking Authority (EBA), and European Insurance and Occupational Pensions Authority (EIOPA), to request them to warn crypto enthusiasts of the risks involved in crypto investment.

Even though Dombrovskis supported cryptocurrencies in his recent statement, he conveyed his warning once again. However, on the topic of ICOs, he explained that they had the “potential to emerge as a viable form of alternative financing.”

The EU has consistently struggled with one question: should they create new laws or apply existing laws to the crypto sector? According to Dombrovskis, ECOFIN is working with EBA, ESMA, and EIOPA to find solutions to these problems.

ICO Approval Status in Other Countries

Last month, 15 members of Congress signed a letter requesting the U.S. Securities and Exchange Commission (SEC) to clarify the status of ICOs and other cryptocurrency assets.

Meanwhile, the UAE’s Emirates Securities & Commodities Authority (ESCA) recently announced that the country would launch ICOs to help raise money for businesses in 2019. The ESCA also plans to submit a regulatory framework for ICOs within the first six months of 2019.

Last week, Min Byung-Doo, National Policy Committee chairman of South Korea, emphasized the importance of legalizing ICOs in South Korea’s National Assembly meeting. Byung-Doo pointed out that ICOs couldn’t simply be dismissed since they are “getting bigger and bigger.”

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