Regulation
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The European Securities and Markets Authority (ESMA) issued a statement reminding investment firms to disclose the regulatory status of their products, especially digital assets.
⚠️ #ESMA warns investors of risks that arise when investment firms offer both regulated and unregulated products and/or services.
🔎 remind firms of the behaviours they are expected to adopt
🔎 firms may not benefit from regulatory protectionshttps://t.co/TT3CQFgeKs pic.twitter.com/5CPrrbbvid— ESMA — EU Securities Markets Regulator 🇪🇺 (@ESMAComms) May 25, 2023
ESMA clarified that while the adoption of relevant laws is in the process, cryptocurrency remains unregulated in most jurisdictions. According to the agency, digital assets pose risks to the security of investors.
Passed on April 20, the Comprehensive Crypto Industry Regulation (MiCA) bill requires companies to obtain a license to operate in a block of countries, and stablecoin issuers to have backup collateral. The provisions will come into force in 2025.
The regulator believes that customers of companies can be “misled as to the level of protection they receive.”
To mitigate risk, ESMA recommends that investment firms take steps to ensure that clients are aware of the regulatory status of the products they offer. Companies must also inform users when legal protection does not apply to their services.
Companies need to consider the impact of unregulated activities on their business when developing policies and risk management systems, ESMA added.
Recall that in May, the Council of the European Union, which includes 27 countries, unanimously approved MiCA. EU member states have also approved new measures to combat money laundering.
#reminded #companies #disclose #status #cryptocurrencies
