In this episode of Coinlaw Podcast, we take a close look at the recently released Advice on Initial Coin Offerings and Crypto-Assets by the European Securities and Markets Authority (ESMA). Our guest, Anne Chone, is the agency’s Senior Risk Analysis Officer.
- The NCAs survey revealed that a broad agreement exists within the EU on qualifying certain cryptoassets as financial instruments, there are however some differences in the national definitions of what constitutes a financial instrument.
- There is also broad agreement that so-called pure utility tokens would likely fall outside of the existing rules.
- An EU-wide response makes sense because it provides a harmonized framework across Europe, and allows investors and firms to operate across borders.
- AML requirements should apply to all types of cryptoassets and there should be appropriate risk disclosure in place so that investors understand the risk before committing funds.
- If an STO is a security that is like a traditional financial instrument, then existing rules should apply. ESMA’s technologically-neutral approach means that the same rules should apply to the same activities according to the same risk. This is especially true if the investment is high-risk, regardless of the technology used to issue an investment.
- Considering the technological development, in certain instances, the rules will need clarification, interpretation, and requirements for adoption.
- Having more elaborate regulation at this stage is premature, considering that it is an early stage and the business models are still evolving.
You can also read a transcript of the interview here