Europe’s leading securities regulator has warned investors that rising inflation could push them to crypto. The regulator stressed that the way each EU country handles crypto is not balanced and called for a common European regulatory framework.
According to EU regulator, Inflation could drive investors to crypto.
Bloomberg reported that the European Securities and Markets Authority, which is the EU’s most important regulator of securities markets, warned Thursday that rising inflation could drive retail investors to cryptocurrencies.
A formal legal framework is also needed to regulate the crypto industry in all EU countries, according to the regulator.
Verena Ross, Chair of the ESMA, stated in an interview last Wednesday:
Investors will be looking for investments that can compensate inflation and provide greater returns. This could lead to higher risk taking.
She stressed that “that is something we are closely monitoring,”
Many investors believe bitcoin is an excellent hedge against inflation. Paul Tudor Jones, a well-known hedge fund manager, is one of them. The crypto asset is volatile, and has dropped 26% in the last 30 days. The crypto market has lost approximately $500 billion this month.
Each country in the EU sets its own crypto rules, based on local laws. There is no single framework for crypto.
Detail of the ESMA chair:
These entities are not covered by the EU regulatory framework. As such, there is an inequality in the way that national supervisors treat them and their judgments.
She stressed that “that’s where a shared regulatory framework will help.”
Last month, the European Parliament gave ESMA power for regulation of crypto-issuers and service providers.
The Markets in Crypto Assets bill is currently being considered by the European Parliament and European Council. This legislation was introduced in 2020 and provides a legal framework that allows crypto asset markets to grow within the EU.
