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International coordination and consensus on policy is needed to capture risks posed by crypto-assets (e.g. in areas of financial stability, monetary policy, AML or CFT) and to ensure a level playing field across markets.
Market venues for virtual currencies and tokens need to be regulated; including requirements on price transparency, systems against money laundering and information disclosure.
Adapting the regulatory framework for ICOs’ application, the secondary markets and the plat-forms where crypto-assets are exchanged, is of great importance in order to integrate ICOs on the diverse set of rules applying to other forms of raising capital.
It is necessary to ensure a single supervisory approach on ICOs in order to guarantee the transparency of operations and the origin of funds. Regulatory uncertainty on ICOs cre-ates a regulatory limbo as new firms succeed at the expense of more regulated competitors and/or investors’ protection.
The growing risks, stemming from the impact cyber-attacks can have on the ICO market, need to be addressed, for instance when a crypto exchange has their crypto-currencies stolen.
The lack of clarity on which ‘white papers’ must be applied (e.g. in some cases the Prospectus Regulation may apply, but in others it may not, while sometimes even applying that Regula-tion might need an adaptation to the different technological environment). This lack of clarity often provokes non-existent due diligence performed by investors.
The anonymity of the wallet holders and the existence of blockchains specifically designed to ensure secrecy over the sender, the receiver and the amount transferred, create virtually risk-free ways of laundering money originating from criminal activities, or hiding the financing of terrorist organisations. EU legislators will have to find ways to ban cryptocurrencies designed to make users untraceable, and criminally sanction the malicious use of blockchain and DLT technology.
ESBG also encourages EU regulators to continue identifying if other crypto-assets and ser-vices providers should be covered by the AMLD, and encourages the establishment of appro-priate instruments enabling authorities to prevent tax avoidance and tax evasion.
Published by ESBG. January 2020.