ESMA Call for Evidence on Investments Using Virtual Currency or Distributed Ledger Technology
On April 22, the European Securities and Markets Authority (ESMA) published a call for evidence on investments using virtual currency (vc) or distributed ledger technology.
ESMA has been monitoring and analyzing VC investment over the last six months to understand developments in the market, potential benefits or risks for investors, market integrity or financial stability, and to support functioning of the EU single market. ESMA is sharing its analysis to promote wider understanding of innovative market developments. It requests feedback and any additional information on the following:
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VC products. For example, collective investment schemes or derivatives such as options and contracts for difference that have VC as an underlying or invest in VC related businesses and infrastructure. Annex II to the paper provides an overview of VC investment products identified by ESMA.
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VC based assets and securities and asset transfers. For example, financial assets such as shares and funds that are exclusively traded using VC distributed block chains (also known as block chains).
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The application of the distributed ledger technology to securities and investments, whether inside or outside a VC environment.
The consultation closes on July 21, 2015.
ESMA intends to monitor the evolution of investments using VC or distributed ledger technology to ensure that regulators are aware of significant market developments. Subject to assessing the responses received to the call for evidence, it has no immediate plans to take any regulatory action.
Council of EU Mandate to Negotiate Agreement With US on Reinsurance
On April 21, the Council of the EU published a press release announcing that it has issued a mandate to the European Commission to negotiate an agreement with the US on reinsurance.
The mandate consists of a decision authorizing the opening of talks and directives for the negotiation of the agreement. The Commission will negotiate on behalf of the EU, in consultation with a Council committee. The agreement will be concluded by the Council with the consent of the European Parliament.
Commenting on the announcement, Janis Reirs, Council president, stated that the agreement would enable the US and EU to recognize each other's prudential rules and help supervisors exchange information.
Money Laundering: Council Approves Strengthened Rules
On April 20, the Council of the EU published a press release announcing that it has adopted its position at first reading on new rules aimed at preventing money laundering and terrorist financing.
The directive and regulation will strengthen EU rules against money laundering and ensure consistency with the approach followed at international level. The regulation deals more specifically with information accompanying transfers of funds.
The strengthened rules reflect the need for the EU to adapt its legislation to take account of the development of technology and other means at the disposal of criminals. The main elements are:
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Extension of the directive's scope, introducing requirements for a greater number of traders. This is achieved by reducing from €15,000 to €10,000 the cash payment threshold for the inclusion of traders in goods, and also including providers of gambling services;
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Application of a risk-based approach, using evidence-based decision making, to better target risks;
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Tighter rules on customer due diligence. Obliged entities such as banks are required to take enhanced measures where the risks are greater, and can take simplified measures where risks are demonstrated to be smaller.
The decision will enable the European Parliament, with which agreement was reached on December 16, 2014, to adopt the package at second reading at a forthcoming plenary session. Member states will have two years to transpose the directive into national law. The regulation will be directly applicable.
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