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EU regulator calls on crypto firms to publish regulatory status of products

by SuperiorInvest

The European Union’s Financial Supervisory Authority has issued a statement reminding investment firms to ensure their clients are informed of the regulatory status of the products they offer.

In a notice the European Securities and Markets Authority (ESMA) highlighted crypto assets and reminded companies that while regulation is on the way, cryptocurrencies will remain unregulated in most jurisdictions. ESMA stated:

“Specifically for crypto assets, while the Markets in Crypto Assets Regulation (MiCA) is close to adoption, crypto assets offered by investment firms will continue to be unregulated in most jurisdictions until MiCA is in place.”

ESMA has expressed concern about unregulated product and service offerings. According to the regulator, these carry prudential risks and investor protection risks. In addition, the financial watchdog believes it is possible for clients to be “misled as to the level of protection they are receiving”.

To mitigate these risks, ESMA recommended that investment firms take measures to ensure that their clients know the regulatory status of the products in which they invest. The regulator also advised firms to clearly inform clients when their products or services are not covered by regulatory protections.

In addition, ESMA encouraged investment firms to consider the impact of unregulated activities on their business when designing risk management policies and systems.

Related: EU finance ministers approve regulation of MiCA cryptocurrencies

Meanwhile, crypto firms are starting to build a presence in Ireland to expand their business in Europe. May 25 crypto firm Gemini chose Ireland as his European base. Gemini founder Cameron Winklevoss confirmed the company had chosen Ireland as its “entry point into the EU”.

In addition to Gemini, crypto exchange Kraken also started preparing for it expand operations in Europe. On April 18, the Dublin-based subsidiary of the exchange was granted a virtual asset service provider license by the local central bank.

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