Crypto assets are currently unregulated under EU securities rules, and the ESMA said investors would not benefit from any EU-level regulatory and supervisory protection, or recourse mechanisms under MiCA, until December 2024
Investors will not be protected under European Union (EU) crypto asset market rules until at least the end of 2024, and even then they should still be ready to lose all their money, EU’s securities watchdog said on Tuesday.
The EU was the first jurisdiction in the world to approve an extensive set of rules to regulate markets for crypto assets such as bitcoin, which came into force in June but would not be fully implemented until December 2024.
Regulating crypto has become more urgent for regulators after the failure of crypto exchange FTX and with huge volatility in bitcoin prices.
Crypto assets are presently unregulated under EU securities rules, and the European Securities and Markets Authority (ESMA) said investors would not benefit from any EU-level regulatory and supervisory protection, or recourse mechanisms under the new rules, known as MiCA, until December next year.
Even with the implementation of MiCA, retail investors must be aware that there will be no such thing as a ‘safe’ crypto asset, the European Union watchdog said in a statement.
Can you afford to lose all the money you are planning to invest? ESMA added, saying that crypto assets were prone to “novel operational and security risks”.
Total safeguards may not be available in European Union states that grant an 18-month transitional period for crypto companies to operate without an EU licence, meaning customers may not be covered until July 2026.
A significant number of crypto companies would probably continue to offer their services under the transitional terms until mid-2026, ESMA added.
Crypto companies from non-EU nations will be allowed to provide services to customers in the bloc that have specifically requested them, and even then only on a “strictly limited” basis.
While this exception will be subject to further guidance by ESMA, it should be understood as very narrowly framed and as such must be considered the exception; and it cannot be assumed, nor misused to evade MiCA, ESMA said.