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Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), said that the ESMA is all set to keep a watch on every ICO (Initial Coin Offering) to check if it needs to be regulated and how. Founded in 2011, ESMA is a body that was established to chalk out standard rules for all financial markets of EU and oversee them.

During an ICO, cryptocurrencies are issued to amass funds for a start-up organization. Though typically statutory warnings accompany ICOs, investors have not paid much heed to such notices. Maijoor stated that his organization is assessing how ICOs can be aligned with existing regulations and what effect ICOs have on the capital raising sector.

ESMA, along with regulators like European Banking Authority (EBA) and European Insurance and Occupational Pensions Authority (EIOPA) will review ICOs on a ‘case-by-case’ basis to find out which of them are in sync with current securities rules, and also examine how to deal with the ICOs that are outside the regulatory framework.

Maijoor said:

“Some of these ICOs are like a financial instrument. Once it is a financial instrument it comes under a whole regulatory framework. The subsequent question is what do we do with those ICOs that are outside the regulatory world. We will assess that as a board. We expect to report by the end of the year.”

He also pointed out that ICOs have not been very successful in making investors believe confidently that they are getting any extra benefits with ICOs compared with traditional ways of raising funds. On the other hand, Andrea Enria, chair of the European Banking Authority, said that he has received pointers that ICOs be allowed to develop without any specific EU rules.

Ernia says:

“This is not working as expected. Consumer warnings don’t seem to be sufficiently effective in raising awareness among consumers that there is a lack of safety net for these investments.”

EU finance ministers brought out a report last month stating that standard rules should be adopted in the EU for regulation of cryptocurrencies and that the EU should also check the distribution of digital assets closely.