In a significant development for the cryptocurrency market, the European Securities and Markets Authority (ESMA) issued a stern warning to investors, announcing that they will not benefit from the protection of European Union (EU) rules until at least December 2024. Moreover, ESMA warned that even after the implementation of these regulations, investors should be prepared for the possibility of losing all their invested capital. Here are the details…
Warning to cryptocurrency investors from Europe
The European Union has been a pioneer in regulating cryptoasset markets as the first jurisdiction to approve a comprehensive set of rules. These rules, collectively known as MiCA, were implemented in June. However, they will not be fully implemented until December 2024. According to ESMA, cryptoassets are currently unregulated under EU securities rules, meaning investors will not benefit from any regulatory oversight or supervisory assurance at the EU level until the full implementation of MiCA in December 2024.
“Even with the implementation of MiCA, retail investors should be aware that there will be no such thing as a ‘safe’ crypto asset,” the EU watchdog said, underlining the risks inherent in investing in cryptocurrencies. ESMA also emphasized that crypto assets are susceptible to “new operational and security risks” and stressed that investors should be careful.
ESMA cannot guarantee full protection
ESMA also highlighted that full protection may not be guaranteed in EU countries, which give crypto companies an 18-month transition period to operate without an EU licence. This means customers could be left out in the cold until July 2026. ESMA predicts that a significant number of crypto firms will continue to offer their services under these transitional conditions until mid-2026. To protect the integrity of the regulatory framework, ESMA announced that cryptocurrency firms from non-EU countries will be allowed to offer their services to EU customers, but on a “very limited” basis.
However, ESMA has made it clear that this exemption is narrow-framed and should not be used to circumvent MiCA regulations. This warning from ESMA is an important reminder for crypto investors and highlights the need to fully understand the risks associated with the cryptocurrency market. The regulatory environment is evolving and investors should stay informed and exercise due diligence to protect their investments. As we move closer to the full implementation of MiCA regulations in December 2024, the crypto market will undergo significant changes. Investors should heed ESMA’s cautious advice. One should also approach cryptocurrency investments cautiously and aware of the risks involved.
To be informed about the latest developments, follow us Twitter’in, Facebookin and InstagramFollow on . Telegram And YouTube Join our channel.