Investment Firms Reminded by ESMA: Crypto to Remain Unregulated in Many Places Despite New Regulations.
In a recent announcement, the European Securities and Markets Authority (ESMA) drew attention to crypto assets and emphasized to companies that although regulations are being developed, crypto will continue to lack regulation in many regions. ESMA conveyed the following message:
ESMA’s Message Regarding Crypto Assets: Regarding crypto assets, ESMA highlighted that although the Markets in Crypto-Assets Regulation (MiCA) is nearing adoption, it is important to note that crypto assets offered by investment firms will generally remain unregulated in most places until MiCA comes into effect.
Also Read This Related: EU Regulator Signals Potential Veto on Large Stablecoins in MiCA Approval Process
ESMA Raises Concerns About Unregulated Products and Services: ESMA has shared its worries regarding the offerings of unregulated products and services. The regulator has identified potential risks related to prudential matters and the protection of investors. Moreover, ESMA believes that clients may be misled about the level of protection they receive.
EU Financial Watchdog Reminds Investment Firms to Inform Clients about Regulatory Status: The financial watchdog of the European Union has released a statement to emphasize the importance for investment firms to ensure that their clients are well-informed about the regulatory status of the products they are offering. The purpose of this reminder is to promote transparency and enable clients to make informed decisions.
⚠️ #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’s Recommendations for Investment Firms to Manage Risks: To address these risks, ESMA has provided recommendations to investment firms. They suggest taking measures to ensure that clients are informed about the regulatory status of the products they are investing in. Additionally, ESMA advises firms to clearly communicate to clients when regulatory protections do not apply to the products or services they offer. These recommendations aim to enhance client awareness and promote transparency in the investment process.
ESMA’s Advice to Investment Firms Regarding Unregulated Activities: ESMA further encouraged investment firms to take into account the consequences of engaging in unregulated activities when developing their risk management policies and systems. This advice highlights the importance of considering the potential risks and implications associated with such activities and integrating appropriate measures to mitigate them.
Crypto Companies Expanding to Ireland as European Base: As part of their efforts to expand their operations in Europe, crypto firms are selecting Ireland as a favorable location. Gemini, a prominent crypto company, announced on May 25 that they have chosen Ireland as their “entry point into the EU,” as confirmed by the founder, Cameron Winklevoss. This decision signifies the growing interest in establishing a presence in Ireland to access the European market.
Kraken, a well-known crypto exchange, is joining Gemini in expanding its operations in Europe. The exchange has taken steps to establish a presence by preparing for expansion. In particular, on April 18, Kraken’s subsidiary based in Dublin received authorization as a virtual asset service provider from the central bank of Ireland. This authorization allows Kraken to offer its services in Ireland and signals their commitment to entering the European market.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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