As we predicted, consumer protection and level playing field concerns are driving regulatory action in crypto-assets markets. The EBA and ESMA published two reports on 9 January calling on the on the EU Commission to consider EU-wide regulatory measures for crypto-assets.
In the UK, the EBA and ESMA reports follow the Crypto-assets Taskforce review. In its wake, the FCA is expected to issue (very soon) a clarification of the regulatory perimeter for crypto-assets, and the UK government is planning to issue legislation on the use of crypto-assets for illicit activity, which promises to go significantly beyond current EU rules.
Additional crypto-assets regulation now seems inevitable.
And while it is possible that additional regulatory scrutiny will reduce the attractiveness of some crypto business models, greater regulatory certainty may also lead to more financial firms engaging with the crypto-assets community and/or adding crypto-assets to their offerings.
Either way, there are both regulatory and business incentives for firms to prepare for it.
The European Commission has its work cut out after an official report concluded that the patchwork of different rules across the European Union covering crypto-assets could be exploited, and consumers could be failed by a lack of regulations.