Key Points
- Europe’s top regulator, ESMA, has warned crypto firms not to mislead customers about their regulatory status.
- The concern is that companies are mixing regulated and unregulated products, making everything seem protected.
- This comes as the EU’s new MiCA crypto regulations are being implemented to protect investors.
- ESMA recently criticized Malta’s regulator for being too lenient in granting a crypto license.
Europe’s top financial watchdog is cracking down on crypto companies, telling them to stop misleading their customers about which products are regulated. The European Securities and Markets Authority (ESMA) issued a sharp warning on Friday, saying firms shouldn’t use their new official status as a marketing trick.
The warning comes as the European Union’s new crypto rules, known as MiCA, roll out across the bloc. Under these rules, crypto companies must get a special license to operate. The rules are designed to protect investors, especially after major collapses like FTX left millions of people with nothing.
However, ESMA is worried that some companies are blurring the lines. They might offer a few regulated services on the same platform as many unregulated, high-risk products.
By waving their new license around, they can make it seem like everything they offer is safe and government-approved, when in fact it’s not. ESMA said companies should not use their regulatory status as a “promotional tool.”
The regulator is taking this seriously. The statement came just one day after ESMA criticized Malta’s financial authority for not being thorough enough when it granted a license to an unnamed crypto firm. This raises concerns that some countries might be handing out these important licenses too easily.
The message to the crypto industry is clear: be honest with your customers. The EU is creating a framework for crypto. Still, it will not tolerate companies that use those rules to build a false sense of security around their riskiest products.
