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ESMA issues press release on initial coin offerings and crypto-assets

ESMA has published its Advice aimed at the European Union Institutions on initial coin offerings and crypto-assets. The Advice aims at clarifying the existing EU rules applicable to crypto-assets which qualify as financial instruments whilst providing ESMA’s position on matters which require consideration by EU policymakers with regard to the current EU financial regulatory framework.

Based on a survey of National Competent Authorities (‘NCAs’) during 2018 and in the course of its collaboration with said NCAs, ESMA identified two main categories of concerns in the current financial regulatory framework. The first relates to crypto-assets which qualify as financial instruments, in respect of which ESMA has suggested the re-consideration of certain requirements to ensure the proper interpretation application of existing rules. With respect to those assets which do not qualify as financial instruments, ESMA has raised concerns on the substantial risks to which investors are consequently exposed to due to a lack of regulatory oversight. In this regard, and as a minimum, ESMA has suggested the application of anti-money laundering requirements and risks disclosures to such cases, to mitigate the risk to investors.

Malta has not only applied the latter requirements to initial coin offerings but, in terms of the Virtual Financial Assets Regime which came into force on the 1st November 2018, now regulates initial virtual financial assets offerings in Malta, inter alia. The regulatory regime adopted and implemented in Malta is aimed specifically at providing a robust framework for the regulation of initial coin offerings, their issues and related service providers.

For further information on initial coin offerings and related services in Malta, please contact our financial services department jean.farrugia@dfadvocates.com or on johan.farrugia@dfadvocates.com.

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