The European Securities and Markets Authority (ESMA) recently emphasized the importance of investment firms disclosing their crypto products’ regulatory status to clients. The European Securities and Markets Authority (ESMA) is the European Union’s financial watchdog. They highlighted that, despite upcoming regulations, most jurisdictions still lack a specific crypto law.
The European Securities and Markets Authority (ESMA) expressed concern about the risks associated with unregulated crypto assets and services. These dangers include potential investor harm and a lack of prudential measures. Furthermore, the regulator warned that clients may be misled about the level of protection they will receive if they invest in such products.
To address these concerns, the ESMA advised investment firms to take proactive steps to inform their clients about the regulatory status of the crypto assets they offer. It is critical for businesses to communicate clearly with one another. Especially when clients are in line and you need to tell them whether or not a product is protected by regulations.
🇪🇺 EU regulator, ESMA, emphasizes the importance of transparency in the crypto industry.
— Walletor (@walletorapp) May 26, 2023
In addition, the ESMA urged investment firms to consider the impact of unregulated activities on their business. This recognition of potential risks associated with unregulated activities is critical for all businesses. When investing, they should act appropriately and keep their clients safe.
Despite the fact that the Markets in Crypto-Assets Regulation (MiCA) is nearing completion, jurisdictions still need to be improved. Some countries lack proper jurisdiction for crypto assets until MiCA is fully implemented.
It is critical to promote transparency and ensure that clients are aware of the regulatory status of products. The ESMA’s goal is to promote investor protection and reduce the risks associated with crypto assets. This proactive approach encourages investment firms to provide their clients with clear information. Clients will be better informed about investments and will be less likely to make poor decisions.
Overall, the ESMA’s recent statement serves as a reminder to crypto firms to disclose their regulatory status. This may also encourage lawmakers to draft new bills to protect customers, particularly in jurisdictions where there is no crypto-related law. Firms can help to mitigate risks and keep the crypto economy safe by doing so.