European regulators need more powers to police crypto, watchdog says

ESMA Urges More Powers for Regulators to Enforce EU Crypto Regulation and Freeze Assets

ESMA Calls for Enhanced Regulatory Authority Over Crypto Assets

ESMA's Recommendations for Strengthening Enforcement

PARIS, Sept 30 (Reuters) - The European Securities and Markets Authority said on Wednesday that European regulators should be given more powers to help them enforce crypto rules, and that ESMA should be able to tell crypto companies to freeze crypto assets when they have reasonable grounds to suspect that they are linked to crime.

Empowering National Regulators

• ESMA said national regulators, who are responsible for enforcing the European Union's crypto regulation, called MiCA, could be given powers to remove websites for scams or unauthorised crypto companies.

Asset Freezing in Cases of Financial Crime

• They and ESMA should be given more power to make crypto companies freeze assets in the case of financial crime, money-laundering or terrorist financing, ESMA said.

• "Because of current lengthy procedures, when the freezing of suspicious crypto assets (linked to criminal activities) is requested, it is often too late and the assets have disappeared," it said.

Additional Proposals to Strengthen Crypto Oversight

Regulating Crypto Marketing and Third-Party Promotion

• ESMA also proposed that certain misleading crypto marketing techniques should be banned and there should be rules for third-party marketing.

Combating Unauthorised Cross-Border Activity

• Country-level regulators should be given specific powers to combat crypto companies in non-EU countries which actively solicit EU investors without having authorisation, ESMA said.

Enhancing Transparency for Customers

• It proposed that crypto companies should be required to provide full cost information to customers.

Context and Industry Response

Consultation on MiCA Regulation

• The proposals are part of the watchdog's response to a consultation on MiCA, which is being reviewed. A group of central banks in Europe also published their response last week.

Concerns Over Regulatory Divergence

• Some regulators have expressed concern about regulatory divergence and patchy enforcement of the MiCA rules.

Reporting and Editorial Information

(Reporting by Elizabeth Howcroft in Paris; Editing by Emelia Sithole-Matarise)