Europe’s top securities regulator has warned that soaring inflation could drive investors to cryptocurrencies. Stressing that there is “an imbalance” in how each EU country deals with crypto, the regulator calls for a common regulatory framework across European countries.
According to EU regulator, Inflation could drive investors to crypto.
The European Securities and Markets Authority (ESMA), the EU’s top securities markets regulator, has warned that soaring inflation may drive retail investors into cryptocurrencies, Bloomberg reported Thursday.
A formal legal framework is also needed to regulate the cryptocurrency 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.
“That is something we are monitoring very closely,” she emphasized.
Paul Tudor Jones, a well-known hedge fund manager and investor who believes bitcoin can be a good hedge against inflation. The crypto asset has been volatile, falling 26% in the last 30 days. In total, around $500 billion has been lost by the crypto market this month.
At the moment, every country within the EU has its own rules for crypto. These decisions are influenced by local laws. It is unclear if there are any common rules for crypto.
Detail of the ESMA Chair
These types of entities do not have an EU regulation framework at present. This causes a gap in the way that national supervisors treat them, and also how they are judged.
“That’s where a common regulatory framework will help,” she stressed.
The European Parliament gave ESMA the power last month to regulate service providers and crypto-issuers.
While the European Parliament and European Council continue to consider the Markets in Crypto Assets bill, This legislation was introduced in 2020 and provides the legal basis for development of crypto asset markets within the EU.
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