The European Securities and Markets Authority, also known as ESMA, has confirmed in a Thursday press release that the European Union will be seeing a joint venture for cryptocurrency and digital asset regulation within 2020-22 for the regulator.
The topics of discussion mostly fall on cybersecurity issues that blockchain technology solves but also causes. Many in ESMA believe that cryptocurrencies are one of the primary causes of cybersecurity issues, while the platform they are based on, blockchain technology is the primary preventative platform to use.
Naturally, most of cybersecurity issues brought up by the European regulator have to do with financial security rather than data security. Thousands of European crypto investors have been defrauded of their investments in the past due to fraudulent Initial Coin Offerings and various other scam operations.
The joint crypto regulation is aiming to reduce those cases as much as possible, and eventually bring their numbers down to zero.
Perfect time to act in Europe
Over the years, ESMA has been in the background when it comes to regulating the crypto markets. This has mostly been due to the decentralization of the industry, thus preventing the agency to truly participate or adopt cryptocurrencies to their already existing rules.
Furthermore, the harsh environment that ESMA has created for other financial markets such as Forex and stocks would simply be impossible to follow for cryptocurrency service providers.
European cryptocurrency trading brokers or those utilizing crypto CFDs would simply not have any possibility of generating a profit with the conditions offered by the regulator. This could be one reason why the ESMA was avoiding any harsh regulations and allowed the markets to develop until now.
Furthermore, the European Commission and almost every member state of the European Union have started drafting their own crypto regulations to protect their citizens from additional ICO scams or otherwise. The intrusion of ESMA in these processes was warranted and justified and quite frankly expected.
No bans to be expected by the ESMA
Naturally, the regulation doesn’t necessarily mean that there is a crypto ban coming to the European Union, no matter how many countries, Spain being one, would like to have it that way. Regulation is simply a way for the government to keep an eye on the industry.
Many crypto enthusiasts will most likely be outraged by this new implementation, but in all honesty, it’s one of the best tools that the industry can use to further develop and eventually be adopted to local economies.
If the government has no idea where the funds are coming from in a specific financial sector or how the participants of those markets behave, then they get chaos and a crime-riddled industry.
Sure the customer base of crypto companies may learn to avoid scammers today, but the elaborate ways that fraudsters manage to mask their true intentions could be mind-boggling.
A primary example of this would be Bitconnect, which was considered as one of the largest exit scams in history. The huge conferences, marketing expenses, and branding payments that this company was making painted them as a trustworthy company looking to make profits not only for themselves but for their customers as well.
However, it soon got the plug pulled out and the founders simply ran away with the money.
The moral of the story is that any legitimate crypto company could be a den of fraudsters and only a government-commissioned agency has the resources to determine the authenticity of every claim a company can make.
No bans should be expected, but additional checks of identity in the crypto market are almost guaranteed in the EU.