On August 20, the European Securities and Markets Authority (ESMA) published a letter written jointly with the European Banking Authority (EBA) and addressed to the European Commission (EC) relating to cryptoassets. The letter responds to a letter from the Commission dated July 19.

The letter begins by welcoming the EC’s work responding to issues identified in the January 2019 reports by ESMA and the EBA on cryptoassets and initial coin offerings (for more information, see the January 11, 2019 edition of Corporate & Financial Weekly Digest). ESMA and the EBA agree that it is vital that further work progresses urgently to inform any actions taken by the new EC.

The letter goes on to state that, as well as continuously monitoring market developments, ESMA and the EBA have a number of work streams underway relating to cryptoassets. At the international level, they are engaging with the Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS), the Financial Action Task Force (FATF), the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO). This work is intended to help inform a common approach at international level, for example, on matters such as the prudential treatment of banks’ exposures to cryptoassets, as well as the regulatory treatment of cryptoasset exchanges and trading platforms.

At the EU level, ESMA and the EBA will shortly launch a new stock-taking exercise of national regimes applicable to cryptoassets. This will include questions relating to the regulatory treatment of stablecoins, in the light of their increasing prominence. The letter adds that stablecoins also will be discussed at an event of the European Forum for Innovation Facilitators (EFIF) in September, along with a range of other financial technologies. The discussions at the EFIF level are intended to enhance national competent authorities’ understanding of the underlying technologies and their application in the financial services sector, and to promote a common regulatory and supervisory approach.

The letter is available here.