France’s main financial regulator has proposed changing the way the cryptocurrency industry in Europe is monitored.
Robert Ophèle, Chairman of Autorité des Marchés Financiers, addressed crypto-related regulatory issues at the 5th Annual FinTech and Regulation Conference. The official argued that financial regulators must take a new approach in regulating blockchain-based financial instruments due to the massive growth in the market.
Ophèle suggested that the European Securities and Markets Authority, or ESMA, be the responsible authority for this new area of regulation and supervision. Ophèle emphasized that the current phase of regulation in the European Union would make it easier for ESMA to develop guidelines and policies:
“As this regulation is brand new, it is easier to empower ESMA from the outset than if it is considered at a later stage. In addition, it would make sense to gather all expertise from the same authority as the cost of access to the crypto world is quite high. “
Based in Paris, ESMA is an independent EU authority dedicated to ensuring the stability of the Union’s financial system by enhancing investor protection and promoting stable financial markets. ESMA issued a joint warning for this at the beginning of 2018 cryptocurrencies were highly risky assets, warning investors ‘not to invest money they cannot afford to lose’.
Ophèle also proposed more supporting regulations, including a regulatory sandbox for the security token industry. The official said the current rules hinder the development of blockchain technology because they are designed for centralized systems. Ophèle said the decentralized nature of blockchain could play a vital role in the European economy:
“DLT would reduce risks, both by accelerating the market chain and by the distributed nature that can mitigate certain cyber risks from centralized market infrastructures, such as the single point of failure. […] It is also a matter of keeping Europe competitive at a time when similar approaches are now being rolled out in many countries. “
the European Commission published its Markets in Crypto-Assets, or MiCA, regulations in September 2020, which provides a legislative regime for crypto markets and relevant service providers. Major crypto firms, including ConsenSys, subsequently expressed concern about the MiCA, warning that the new regulations could overburden the industry with expensive and complex compliance and legal requirements.