European Securities and Markets Authority Says New Blockchain Regulations Would Be ‘Premature’
No specific European Union rules are needed to regulate blockchain for the time being given the sector’s still limited reach, the bloc’s securities watchdog said on Tuesday.
The new report outlines the results of the European Securities and Markets Authority (ESMA) 18-months-long research into the tech and is likely to be welcomed by the growing financial technology sector.
“At this stage, it is premature to fully assess the changes that the technology could bring and the regulatory response that may be needed, given that the technology is still evolving and practical applications are limited both in number and scope,” ESMA said in a statement.
At the same time, new technology does not free up providers from complying with existing rules for safeguarding financial stability and orderly functioning of financial markets, ESMA said.
Apart from that, the European watchdog said it expects the early blockchain applications to focus on improving how existing trading infrastructure works.
“Likely first areas of use may be less automated processes in low volume market segments and processes with minimum dependency on the existing legal framework. These challenges would require further attention before any large-scale use of distributed ledger technology across the financial services sector,” ESMA said.
Regulators across the world have been taking a “softly softly” approach to blockchain, worried about stifling a nascent fintech sector that offers the promise of growth and jobs.
Global regulatory bodies are already looking at blockchain, a paramount step, ESMA said, indicating that, in the future, it may move to develop a regulatory framework.
“ESMA will continue to monitor market developments around DLT to assess whether a regulatory response may be needed.”
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