What has happened?

The European Securities and Markets Authority (ESMA) has added virtual currencies to its top priorities for 2018.

What does this mean?

The European regulator has released its 2018 Supervisory Convergence Work Programme, which outlines its priorities for the coming year.

One of the authority's new tasks will be to monitor developments in financial innovation, in particular virtual currencies, blockchain and initial coin offerings (ICOs).

"ESMA expects the rapid pace of financial innovation developments across the EU securities markets to continue in 2018. These developments influence the way in which securities are developed, traded and supervised. In turn, ESMA is undertaking material analysis on the emergence of such instruments as virtual currencies, such platforms as ICOs and such tools as the distributed ledger technology," ESMA stated.

This is the first time ESMA has included virtual currencies and ICOs on its list of supervisory activities and tasks.

ESMA also said that it will undertake a market analysis in Q3 of the regulatory implications of ICOs to determine when they fall into regulatory scope.

The other areas of priorities are:

  • the consistent application of MiFID II/MiFIR across the EU;
  • improving data quality to ensure efficient reporting;
  • ensuring supervisory convergence in respect of the UK's decision to leave the EU; and
  • safeguarding the free movement of services in the EU through adequate investor protection in the context of cross-border provisions of services.  

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