EU securities watchdog agrees breakthrough rules to regulate ‘Wild West’ crypto sector

The European Union’s (EU) securities regulator has started preparations for heightened supervision of cryptocurrency transactions after the EU agreed on ground-breaking measures to oversee a sector that it referred to as the “Wild West,” according to a public tender document.

The European Securities and Markets Authority (ESMA) will supervise the industry’s larger participants, while the national authorities in the bloc of 27 countries will be responsible for issuing licenses to companies dealing in crypto assets, Reuters reported on August 3.

On Tuesday, August 2, the watchdog issued a public procurement request to companies that provide trading data on cryptocurrency transactions. These transactions include spot trades and derivatives.

Monitoring to cover all major crypto exchanges and assets 

Notably, the public procurement request excludes transactions from blockchain or distributed ledger technology, both of which are fundamental to cryptocurrencies such as Bitcoin. 

“The coverage should encompass all major exchanges and crypto assets so that it provides a fair representation of the crypto market landscape,” ESMA stated in its notice.

Regulators analyze transaction data to identify instances of market abuse, determine who is involved in either side of a transaction, and search for potentially dangerous accumulations of holdings that might disrupt orderly markets. 

“Data should be available with daily frequency and include access to order books where to see spreads and liquidity across exchanges and trading pairs (in fiat and crypto),” it said. 

Finally, the European Banking Authority (EBA), the entity mandated with regulating crypto in the region, has raised concerns over its ability to carry out the task citing a lack of staff and logistical challenges.