The ESMA reminded investment firms that crypto would remain unregulated in most jurisdictions despite upcoming regulations.
The European Union’s financial watchdog has issued a statement reminding investment firms to make sure their clients are aware of the regulatory status of the products they are offering.
In an announcement, the European Securities and Markets Authority (ESMA) highlighted crypto assets and reminded companies that while regulation is on the way, crypto will remain unregulated in most jurisdictions. The ESMA stated:
“Specifically on 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 applies.”
The ESMA expressed concerns over unregulated products and services offerings. According to the regulator, these carry prudential and investor protection risks. In addition, the financial watchdog believes that it’s possible for clients to be “misled as to the level of protection they get.”
To mitigate such risks, the ESMA recommended that investment firms take measures to ensure their clients know the regulatory status of the products they are investing in. The regulator also advised firms to clearly inform clients when regulatory protections do not apply to their products or services.
In addition, the ESMA urged investment firms to consider the impact of unregulated activities on their business when devising risk management policies and systems.
Meanwhile, crypto firms are starting to establish a presence in Ireland to expand their businesses in Europe. On May 25, crypto firm Gemini chose Ireland as its European base. Gemini founder Cameron Winklevoss confirmed that they company picked Ireland as its “entry point into the EU.“
Apart from Gemini, crypto exchange Kraken has also started preparations to expand operations in Europe. On April 18, a subsidiary of the exchange based in Dublin was given a virtual asset service provider authorization by the country’s central bank.