European Securities and Markets Authority Injects €1M Into Crypto Assets Monitoring

News and Analysis

The European Securities and Markets Authority (ESMA) has budgeted over €1 million to monitor financial innovation including cryptocurrencies.

Published this week, the 2019 Annual Work Programme outlines the regulator’s key focus areas for the next year and related budget and staffing numbers.

With regard to financial innovation, ESMA underscored its primary objective, which is to:

“Achieve a coordinated approach to the regulation and supervisory treatment of new or innovative financial activities and provide advice to present to the EU institutions, market participants or consumers.”

The watchdog also plans to “implement the framework for the use of the product intervention powers provided by MiFIR (EU’s Markets in Financial Instruments Directive).”

The latter relates to new measures on the provision of contracts for differences (CFDs) and binary options to retail investors.

These include a ban on the marketing, distribution or sale of binary options to retail investors and a restriction on the marketing, distribution or sale of CFDs to retail investors, including leverage limits on opening positions, preventing the use of incentives by a CFD provider and a standardized risk warning.

“It identifies issues and/or risks connected to such activities and trends, and helps to co-ordinate NCAs [National Competent Authorities] initiatives on market monitoring and facilitating exchanges of best practices, including providing advice or making proposals of relevant actions where needed,” the report said.

Back in January, the ESMA called for public input on CFDs for cryptocurrencies. The regulator said at the time that it was examining how such products would comply with its MiFIR regulatory framework, and that it was considering strict restrictions for the products.

Overall, for its 2019 plans for monitoring and intelligence gathering on crypto assets and fintech, the regulator has budgeted €1,107,360 and six full-time equivalent staff.

Notably, in February 2017, ESMA said that no specific European Union rules were needed to regulate blockchain for the time being given the sector’s still limited reach

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