Verena Ross, Chair of the European Securities and Markets Authority (ESMA), has warned that many crypto assets won’t withstand the market drop.
As a result, the agency chief said that investors should use the crypto market meltdown as a “cautionary lesson.”
There is a “genuine issue,” according to her, about the viability of many crypto assets.
After the cryptocurrency market lost 70% of its value, Verena Ross, chair of the European Securities and Markets Authority (ESMA), warned investors against investing in cryptocurrencies.
She emphasised that there was no chance of a European bailout for cryptocurrency investors without funds, saying:
“European Securities and Markets Authority (ESMA) Chair, Verena Ross, has warned that many crypto assets won’t survive the market crash.”
Emphasising that there was no prospect of a European bailout for out-of-pocket crypto investors, she said:
“We already warned earlier this year . . . about the serious risks retail investors were taking investing in some of the crypto assets.”
As part of the interim agreement on the Markets in Crypto-Assets (MiCA) plan, which was recently reached in Brussels, ESMA will be in charge of licencing crypto asset service providers. The agreement has an implementation term of 18 months and will go into effect in the middle of 2023.
Following the failure of LUNA and UST, Gary Gensler, the U.S. Securities and Exchange Commission chairman (SEC), warned that many crypto tokens would follow in their footsteps.
“We have all said that this is something that is not currently regulated, not something where there is any control over the providers … We know there is a lot of fraud and aggressive marketing going on.”
Christine Lagarde, president of the European Central Bank (ECB), issued a warning last month that crypto assets and decentralised finance (defi) might endanger the financial system’s stability.
“This would be particularly the case if the rapid growth of crypto-asset markets and services continue … and the interconnectedness with both the traditional financial sector and the broader economy is intensified,” she stressed.
The G20 finance ministers and central bank governors will get a report detailing a strong regulatory framework for crypto assets in October, according to a Financial Stability Board (FSB) announcement made on Monday.
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