France wants EU governments to give the responsibility for overseeing cryptocurrencies to the pan-European markets watchdog, instead of national supervisors. French regulators proposed the change on Tuesday as part of a wide-ranging package of reforms intended to strengthen financial regulation across Europe by giving greater powers to the European Securities and Markets Authority (Esma), the EU’s Paris-based regulator. Regulators are clamouring for stricter rules to control the rapidly expanding crypto market, estimated to be worth around $1.5tn, over concerns that criminal gangs are using cryptocurrencies to finance drug smuggling and other illegal activities.
“Granting Esma the power of direct supervision of public offers of cryptoassets in the EU and of cryptoasset service providers would create obvious economies of scale for all national supervisors and concentrate expertise in an efficient way, for the common European benefit,” said the Autorité des Marchés Financiers (AMF), France’s markets regulator. The AMF has become increasingly vocal about the need to reform financial regulation processes and standards across Europe to strengthen the single market after Brexit and to promote the EU’s post-coronavirus economic recovery. “The EU should seriously consider a shift towards a truly
Binance, one of the world’s largest crypto exchanges, shifted its operations to Malta in 2018. But the Maltese regulator said in 2020 that it was not responsible for regulating the exchange, highlighting uncertainty about who supervises the company’s activities. French authorities also want new supervisory tools to be given to Esma, such as so-called “no-action letters” which are used by US regulators to provide guidance on interpreting financial rules.
Supervision of clearing houses and bourse operators could also be transferred from national governments to Esma, under the AMF’s proposals. Non-financial data and ratings, which investors are increasingly reliant on for sustainable investment metrics, would also fall under the EU-wide regulator. Julie Patterson, head of asset management regulatory change at KPMG, the professional services provider, said EU member states had “very different views” regarding how much direct supervision should be done at the EU level rather than their own national regulators.
“Direct supervision by EU institutions is limited at present. Further major change seems unlikely in the short term given that Esma’s responsibilities and powers have recently been extensively reviewed,” she said. Another part of the AMF’s plan would force EU politicians to restrict their decisions to the broad principles of new financial rules while leaving the specific details to regulatory experts. “I have seen no clear evidence that the co-legislators in the [European] Parliament and the Council want their remits to be diminished,” Patterson said. Weekly newsletter.
Source: Financial Times