France’s top financial regulator has proposed changing the way the cryptocurrency industry is monitored in Europe.
Robert Ophèle, Chairman of the Autorité des Marchés Financiers, addressed crypto-implemented regulatory issues at the 5th Annual Conference on FinTech and Regulation. The official argued that given the massive market growth, financial regulators need to take a new approach to regulating blockchain-based financial instruments.
Ophèle suggested that the European Securities and Markets Authority (ESMA) should be the competent authority for this new area of regulation and oversight. Ophèle stressed that the current level of regulation in the European Union would make it easier for ESMA to develop guidelines and strategies:
“As this regulation is brand new, it is easier to instill competence in ESMA from the start than if it is considered at a later stage. In addition, it would make sense to gather all of the expertise within the same authority, as the cost of entering the crypto world is quite high. “
Paris-based ESMA is an independent EU agency that focuses on ensuring the stability of the Union’s financial system by improving investor protection and promoting stable financial markets. In early 2018, ESMA issued a joint warning that cryptocurrencies pose a high level of risk and warned investors not to “invest money they cannot afford to lose”.
Ophèle also proposed other regulations, including a sandbox for the security token industry. The official said the current rules are hindering the development of blockchain technology as it is designed for centralized systems. Ophèle said that the decentralized nature of the blockchain could play a crucial role in the European economy:
“DLT would reduce risk, both by accelerating the market chain and by its distributed nature, which could mitigate some of the cyber risks posed by centralized market infrastructures such as the single point of failure […] It is also about keeping Europe competitive at a time when similar approaches are currently being adopted in many countries. “
In September 2020, the European Commission published its MiCA regulations (Markets in Crypto Assets), which provide for a legislative system for crypto markets and relevant service providers. Large crypto companies, including ConsenSys, then raised concerns about the MiCA and warned that the new regulations could overload the industry with costly and complex compliance and regulatory requirements.