Soaring inflation, according to Europe’s top securities regulator, could drive investors to crypto. The regulator emphasizes that each EU country’s approach to crypto is unbalanced, and advocates for a uniform regulatory framework across Europe.
Bloomberg reported that the European Securities and Markets Authority (ESMA), the EU’s main securities markets regulator, has warned that rising inflation could lure individual investors to cryptocurrencies.
The regulator has also requested that the crypto industry be governed by a formal legislative framework that applies to all EU countries.
In an interview last week, ESMA Chair Verena Ross said:
“With inflation rising, investors will look to find investments which are able to try to compensate for inflation and bring greater returns, which might lead to greater risk taking.”
Many investors, notably renowned hedge fund manager Paul Tudor Jones, feel bitcoin is an excellent inflation hedge. The digital asset, on the other hand, is extremely volatile, having dropped 26% in the last 30 days. The crypto market as a whole has lost about $500 billion this month.
Currently, each EU country establishes its own crypto rules, depending on local laws. The crypto industry lacks a unified foundation.
“There is no EU regulatory framework for these kinds of entities at the moment and so there is currently an imbalance in how national supervisors deal with these entities and how they judge them,” stated the ESMA chair.
The Markets in Crypto Assets (MiCA) bill is currently being debated in the European Parliament and the European Council. The Act, which was introduced in 2020, establishes a legal foundation for the development of crypto asset markets in the EU.