Europe’s top regulator warns that increasing inflation might push investors to the inspector. Meanwhile, the agency stresses that an imbalance exists in crypto regulation in Europe. Therefore, the regulator believes EU countries need a common crypto regulatory framework.
ESMA Says Inflation Might Push Investors To Cryptocurrency
The European Securities and Markets Authority (ESMA) has shifted its attention toward crypto regulation. ESMA, a top regulatory agency in the EU, warns that retail investors are eyeing cryptocurrencies. This is due to the rising inflation across the market.
Also, the watchdog has called for a common legal framework for the crypto industry. Additionally, this will ensure that the regulations in EU countries are the same.
ESMA Chair Verena Ross said in an interview last week:
“In a meeting, the chairman of ESMA, Verena Ross, discussed the crypto market. According to her, the recent inflation might push investors to find safer means of investment. Globally, investors are looking for investments with greater returns, and crypto seems like a good option.”
However, Ross noted that this could lead to greater risk. This is because most of these investors don’t understand the crypto market. She stated the agency is closely monitoring these activities in connection to this.”
Several investors see Bitcoin as a hedge against inflation. One of such persons is Paul Tudor Jones, a popular Hedge Fund Manager.
Unfortunately, the flagship currency is volatile and subject to market fluctuations. In the past month, it has dropped by over 26%. In May, the cryptocurrency market lost over $500 billion in market cap.
A Call For Common Crypto Regulatory Framework
At the moment, each country in the EU sets its own crypto rules. Hence, there are diverse views on what the crypto industry is all about.
The chairman of ESMA noted that:
“Presently, a regulatory framework does not exist in the EU to regulate digital assets. As a result, there is an imbalance when you look at the various regulations. National supervisors see digital assets differently and therefore judge in diverse ways. That is why a common crypto regulatory framework is needed in the EU.”
In May, ESMA received power from European Parliament to regulate crypto service providers. As a result, ESMA has become a top crypto regulatory organization in the EU.
The European Council and the European Parliament are working on the MiCA Bill. The legislation was first introduced in 2020.
The MiCA (Markets in Crypto Assets) Bill will provide legislation for developing the cryptocurrency assets market in the EU. Meanwhile, the bill previously had a clause to ban proof-of-work mining completely.
However, if the clause had remained, digital currencies like BTC would have been affected. Fortunately, there was a vote in March, and they removed the clause.