Be honest with investors, crypto is not regulated

The European Securities and Markets Authority (ESMA) urges investment firms to be transparent about the risks associated with unregulated products, including crypto, and the lack of regulation.

ESMA has raised concerns about investment firms offering unregulated products and services, including crypto. The agency urges firms to be more open with investors about their risks and lack of regulation. ESMA believes that at present, many companies have failed to come up with enough.

transparency for investors

In a statement on Thursday, ESMA and national regulators said they have seen cases where certain products are outside financial regulation but are marketed as investment options. This creates a risk for investors who may not realize the lack of regulatory protection.

The regulator emphasizes that retail investors often rely only on the reputation of investment firms – a so-called “halo effect.”

ESMA particularly emphasizes the risks associated with real estate, gold, raw materials and other non-transferable securities as well as crypto assets. It warns that not all EU countries have the same investor protection regime.

The statement also lists the risks that investors face in relation to unregulated products, such as confusion, insufficient risk awareness and mis-selling.

EU rolls out law

Investors won’t have to wait long for further clarity, as the 27-nation bloc recently passed its wider Markets in Crypto-Assets Act (MiCA) bill, a regulatory framework for crypto businesses in the European Union. This will come into force in June 2023.

The far-reaching legislation aims to provide clarity, uniformity and security for digital assets. as well as establishing clear rules for crypto-asset service providers and token issuers.

By the end of 2024, all constituents of MICA will actively conduct crypto-business operations within the EU.

The response from the industry has been generally positive, with comparisons to the hostile regulatory environment in the United States. Shortly after the April vote, Coinbase Tweeted Admittedly that it would “give crypto organizations the confidence to invest and grow in the sector.”


In compliance with The Trust Project guidelines, BeInCrypto is committed to fair, transparent reporting. The purpose of this news article is to provide accurate, timely information. However, readers are advised to independently verify the facts and consult a professional before making any decisions based on this content.

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