Despite future rules, the ESMA reminded investment businesses that cryptocurrency will continue to be unregulated in most jurisdictions.
The European Securities and Markets Authority (ESMA) highlighted crypto assets in a statement and cautioned businesses that, despite impending regulation, most jurisdictions will not yet have laws governing cryptocurrency.
The ESMA stated:
“Specifically on crypto assets, while the Markets in Crypto-Assets Regulation (MiCA) is close to adoption, crypto assets offered by investment firms will continue to be unregulated in most jurisdictions until MiCA applies.”
Investment firms have been urged in a statement by the financial watchdog of the European Union to ensure that their clients are informed of the regulatory status of the products they are providing.
![EU regulator urges crypto firms to disclose regulatory status of products image 186](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/05/image-186.png?resize=652%2C716&ssl=1)
![EU regulator urges crypto firms to disclose regulatory status of products image 186](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/05/image-186.png?resize=652%2C716&ssl=1)
Enhancing Client Awareness and Regulatory Protections
The European Securities and Markets Authority (ESMA) has advised investment firms to take steps to inform their clients about the regulatory status of the goods they invest in in order to manage the mounting dangers posed by the cryptocurrency industry.
Firms can encourage transparency and well-informed decision-making by making sure that clients are aware of the regulatory protections—or lack thereof—associated with particular products or services. This will make it easier for investors to comprehend and evaluate the risks associated with their investments.
A further piece of advice from the ESMA is for investment businesses to think about how participation in unregulated activities can affect their whole company. Businesses can reduce possible vulnerabilities and safeguard themselves against potential disruptions or negative results by implementing risk management rules and processes that take into consideration the risks connected with unregulated operations.
In the quickly changing crypto ecosystem, proactive risk management measures are essential to preserving stability and protecting both investment businesses’ and their clients’ interests.
Related: Blockchain technology platform Bakkt looks toward Europe after MiCA