June 25, 2019

June 25, 2019

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June 24, 2019

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Stakeholder Report on ICOs and Crypto Assets

The Securities and Markets Stakeholder Group (SMSG) of the European Securities and Markets Authority (ESMA) has published a report on initial coin offerings (ICOs) and crypto assets. The goal of the report is to give advice to ESMA on steps it can take to contain the risks of ICOs and crypto assets, on top of existing regulation and the report mainly focuses on risks for investors as the SMSG there are no obvious market stability risks yet in this respect.

The first part of the report defines relevant concepts including crypto asset, virtual currency, cryptocurrency, token and ICO. There is taxonomy of crypto assets including payment tokens, utility tokens, asset tokens and hyrbids. The report also includes an overview of recent ICOs and of existing regulations of crypto assets, ICOs and sandboxes in 36 jurisdictions including the European Union member states and Switzerland. SMSG gives specific recommendations to ESMA on potential regulatory changes.

In addition, the SMSG advises that although sandboxes and innovation hubs should not be overly regulated, some coordination is necessary. The SMSG advises ESMA to provide guidelines with minimum criteria for national authorities. These criteria should relate to (a) information to ESMA on the exact scope, operating conditions and investor protections fo the sandbox; (b) public transparency and (c) regular reporting to ESMA and the public on the experiences with the use of sandboxes.

Copyright 2019 K & L Gates


About this Author

Edwin Tan, KL Gates, investment fund attorney

Mr. Tan is a commercial and regulatory lawyer with a focus on the financial services industry. He advises on a range of Australian regulatory and compliance issues relevant to FinTechs, fund managers, financial advisers and other financial services entities.

Mr. Tan also provides advice on governance and compliance measures targeted at the prevention of bribery, corruption and anti-money laundering.

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