EU Regulator is Set to Spend €1.1 Million to Monitor Crypto in 2019

In the 2019 Annual Work Programme of the European Securities and Markets Authority (ESMA), it’s been revealed that the EU’s financial watchdog is planning to spend around €1.1 million on tracking and monitoring cryptos and fintech-related transactions in 2019.

The EU’s financial watchdog was predominately formed to keep a close eye on the financial well-being of blockchain technology to prevent money-laundering and terrorism funding.

This pledge is designed to help regulate initiatives within the industry and create a coherent approach to the supervision of the market and for its investors.

One of the critical objectives highlighted in the Annual Work Programme is to “Achieve a co-ordinated approach to the regulation and supervisory treatment of new or innovative financial activities and provide advice to present to the EU institutions, market participants or consumers.”

This marks a significant shift towards a more unified future.

A step in the right direction

While some may argue that over-regulating will stunt the industry’s growth, we believe that this will deliver a fine balance between safety and innovation.

This news follows ESMA’s other developments earlier this year, when they imposed restrictions on the leverages offered for contract-for-differences (CFDs). Meaning cryptocurrency CFDs are limited to a maximum of 2:1.

“Due to the specific characteristics of cryptocurrencies as an asset class the market for financial instruments providing exposure to cryptocurrencies as an asset class the market for financial instruments providing exposure to cryptocurrencies, such as CFDs, will be closely monitored, and ESMA will assess whether stricter measures are required,” the regulator said.

The EU’s watchdog’s commitment to finding a common ground between innovation and the necessary stipulations is an indication that the industry is being seriously considered in the long-term.

As our Head of Compliance, Simone D. Casadei Bernardi, previously covered, to enable bitcoin and other cryptocurrencies to go mainstream, it needs the backing of banks from across the world.

However, if there weren’t any government regulations in place, the CEO of the world’s largest bitcoin ATM network, Sheffield Clark, believes that investors and businesses could face a lot tougher ruling from the banks.

“Those with the idealistic belief that one of the noblest ideals about Bitcoin is that it was created as an “unregulated” currency are fools to believe that it actually survive, much less thrive in that environment. The truth is that Bitcoin and the companies behind it are regulated by the banks in which they depend upon in which to grow their business.

Without any firm regulation from the government, these banks can put whatever restrictions they want onto those companies, resulting in those companies having to comply with much stricter standards than those that would be regulated directly by the government itself – and it’s to the banks’ advantage because at some level Bitcoin is a competitor to their traditional financial instruments whether they want to admit it or not.”

So in theory, the future of cryptocurrency and blockchain technology hinges on a lot of variables. For example, if there wasn’t any regulation, banks probably wouldn’t adopt it, meaning the industry can never really continue its exponential growth.

Or, banks could adopt it without any real regulations in place and harness it to profit their own means – which isn’t great for businesses, the industry or investors.

That’s why, with the EU watchdog making positive steps like this, it can help the industry find a level of equilibrium that benefits everyone involved.


Cover image: © Adobe Stock.

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