The Securities and Markets Stakeholder Group (SMSG) has released a new report suggesting that the European Securities and Markets Authority (ESMA) recommend to the European Commission that it regulate the cryptocurrency space with existing legislation rather than instilling new rules and laws.The report specifies that most crypto assets are covered by the Unfair Commercial Practices Directive, which regulates unfair business practices in the European Union and requires corresponding laws to be passed that incorporate it into each member state’s legal system. However, cryptocurrencies are covered only in the sense that an entity issuing a crypto asset is labeled as a business, while the person purchasing it is a consumer. The report asks several questions about different classes (payment tokens, utility tokens and asset tokens) of digital monies to determine whether they can or should fall under present statutes. For example, does the asset in question give the owner an entitlement against the issuer? Is it transferable? Is it scarce, and how is the scarcity controlled? In terms of payment tokens like bitcoin, the report mentions that they are not presently covered by the Markets in Financial Instruments Directive (MiFID II), which is the EU legislation that regulates firms providing services to clients linked to financial instruments like stock shares and bonds. These tokens are also not covered under t...
