The European Securities and Markets Authority (ESMA) is adopting the same approach as its US counterpart, examining initial coin offerings (ICOs) on a case-by-case basis to determine how they fit the EU regulatory framework.
As reported by Reuters, ESMA chair Steven Maijoor said on Monday some ICOs have the characteristics of financial instruments, which would warrant treatment under a specific framework.
“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,” Maijoor told the European Parliament’s economic affairs committee.
He added that most of the ICOs had had some “difficulty” in showing their viability and advantages compared to the traditional capital raising instruments.
The EU does not currently apply a common approach to cryptocurrencies. Careful not to hinder the growth of the industry through excessive regulatory actions, the EU has limited itself to introducing several anti-money laundering measures for the industry, as well as issuing warnings to retail investors about crypto assets.
However, this approach “is not working as expected,” according to Andrea Enria, chair of the European Banking Authority (EBA). Speaking to lawmakers on Monday, he added that market developments and initiatives undertaken by country regulators in what should act as a single EU market mean that more regulation at the European level could be warranted.
"Consumer warnings don't seem to be sufficiently effective in raising awareness among consumers that there is a lack of safety net for these investments," Reuters cited Enria as saying.
A September report for EU finance ministers recommended the bloc should enact a unified policy that targets entities dealing with cryptocurrencies since the decentralized nature of virtual coins makes it nearly impossible to regulate digital assets like Bitcoin (BTC).
Jay Clayton, chair of the US Securities and Exchange Commission (SEC), said in February that token sales may be securities offerings and thus fall under SEC jurisdiction. The agency is yet to determine which coins fall within this category.