EU Regulator Sets Over 1 Million EUR Budget To Monitor Crypto and FinTech Space
On Thursday, October 4, the European Securities and Markets Authority (ESMA) published a document which shows that the agency has set a budget of over 1 million Euros to monitor cryptocurrency assets and the fintech space during next year of 2019.
The ESMA body was formed in 2011 with the aim to maintain a uniform set of rules in the E.U. financial market as well as maintain certain level of supervision. The ESMA authorities have established several Technical committees in different industrial fields along with information technology (IT). The ESMA body also looks after securities legislations and regulations.
In the latest published document, ESMA also notes that a part of its job is to protect the economic bloc’s financial standing. Moreover, it says that it has “particular focus” on the innovation in the financial space like the crypto assets. It notes that it is actively looking for risks and issues pertaining to this sector.
ESMA notes that its primary objective for the next year is to “Achieve a coordinated 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.”
Furthermore the ESMA plans to develop a framework based on the product intervention capabilities decided by EU's Markets in Financial Instruments Directive (MiFIR). The latest action taken is the new measures introduced for the provision of binary options and contract of differences (CFDs) to the retail investors.
In a press release last month, the ESMA introduced some restrictions for these provisions. “ESMA has carefully considered the need to extend the intervention measure currently in effect. ESMA considers that a significant investor protection concern related to the offer of CFDs to retail clients continues to exist. It has therefore agreed to renew the restriction from 1 November.”
The restrictions include a ban on sale, distribution and marketing of binary products to retails investors. There is a similar ban introduced on CFDs to retail investors. Furthermore for CFDs, there is also other restrictions like preventing the use of incentives by a CFD provider, leverage limits on opening positions, and a standardized risk warning.
In a way decentralization of money or assets looks to be certainly good as it gives absolute control in the hands of individuals. But considering the risks of volatility and bad actors present in the market, regulatory bodies have considered it necessary to intervene to provide investor protection and safety.