EU Securities Watchdog Faces Resource Constraints in Regulating Cryptocurrencies

According to Bloomberg, the European Union (EU) may fall behind in regulating cryptocurrencies as its securities watchdog, the European Securities and Markets Authority (ESMA), faces resource constraints. ESMA has been given additional responsibilities and mandates in recent years without a significant increase in resources, creating challenges for the organization. This raises concerns that the EU may lag behind jurisdictions like the US, where Bitcoin exchange-traded funds (ETFs) have attracted over $11 billion in net inflows since their approval in January. Differences in crypto rules implementation among EU countries have led to confusion among companies and investors. ESMA is now more likely to report its findings toward the end of 2024 or the beginning of 2025. The increasing interconnectedness between crypto assets and traditional finance makes the digital-assets part of the Ucits review even more crucial, according to ESMA's Executive Director, Verena Ross. The EU's first unified industry legislation, the Markets in Cryptoassets act (MiCA), is set to take effect starting in January 2025. However, rival financial centers like Hong Kong and Dubai have already adopted new frameworks for overseeing digital assets. ESMA may have to consider a phased delivery of the legislation for both the regulator and the 27 EU member states to start rolling out the legislation on time.

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