European Securities and Markets Authority to introduce digital currency legal framework to address growing cyber threats to retail customers

According to Finance Magnates, the European Securities and Markets Authority (ESMA) announced on January 9 that it intends to focus on the data security of the financial industry, especially the data security of encrypted assets. In the Strategic Direction 2020-2022, ESMA revealed plans to introduce a legal framework for digital currencies.

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The Strategic Direction reads:

• People's Daily: Guangdong Financial High-tech Zone-Introducing "Blockchain" and Strengthening "Jinkechuang"
• How are overseas blockchain developments? We analyzed 34 blockchain companies at the 2020 CES show
• Review | Digital currency DCEP is about to test why central bank issues digital currency

ESMA will work with national authorities to ask EU market participants to acknowledge the risks that digitalisation can bring. Through appropriate data protection and data quality management, ensure business continuity and use of the latest technology, as well as adequate protection against cyber threats.

The threat of cyber threats to the entire financial system and a sound legal framework for crypto assets are increasingly becoming the focus of attention of other European regulatory authorities such as ESMA, the European Systemic Risk Committee, the European Central Bank and the European Commission.

Retail customers are most affected

Based on the challenges facing the European Union, European citizens and capital markets, European regulators plan activities for the next few years. It will also focus on developing a large retail investor base to support capital market alliances, promote financial sustainability and a long-term market-oriented economy, address the opportunities and risks of digitalization, and ensure a commensurate regulatory approach.

The European Securities and Markets Authority has been observing the digital asset industry. Last year, it issued an advisory report on initial coin offerings and crypto assets, which emphasized that some crypto assets may qualify as financial instruments in the European Financial Instrument Market Directive.

Steven Maijoor, chairman of the regulator, said:

The newly released Strategic Directions illustrates how we will exercise new powers to fulfill our mission to strengthen investor protection and promote stable and orderly financial markets in the EU.

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