EBA: Crypto may need rules to protect consumers

LONDON • European Union (EU) policymakers should consider whether specific rules are required for crypto assets, which currently fall outside the scope of financial-services regulations and pose potential risks to consumers, according to the bloc’s top banking regulator.

The European Banking Authority (EBA) recommended that the European Commission, the EU’s executive arm, carry out further analysis to determine the how to respond to a market that’s now valued at about US$140 billion (RM575.58 billion).

The EBA made the comments in a report on the suitability of current EU rules to a raft of digital assets that includes blockchain currencies like bitcoin, as well as tokens that provide access to a good or service.

The rally in bitcoin and other tokens in 2017 and their subsequent fall to earth in 2018 have thrust digital assets into the crosshairs of regulators. While some jurisdictions have courted the nascent digital assets industry, others have been outright hostile.

A situation where most activities related to crypto assets are deemed to be outside the scope of current rules poses risks to consumer protection, operational resilience and market integrity, the EBA said in the report published yesterday.

The EBA’s comments are similar to those made last year by UK lawmakers, who said cryptocurrencies and most initial coin offerings are not covered by the UK’s Financial Conduct Authority, so investors are typically not protected and have no opportunity for redress. — Bloomberg