The European Securities and Markets Commission has issued a call for evidence on public ledger technology and the blockchain in the EU. The Commission will be collecting opinions over the next six month.

The Commission’s call, published on March 22nd, begins by noting that it is observing the bitcoin market carefully:

“ESMA has been monitoring and analysing virtual currency investment over the last 6 months to understand developments in the market, whether there are potential benefits or risks for investors, market integrity, or financial stability, and to support the functioning of the EU single market.”

The primary interest of the regulator lies in the area of investments. The Commission has formulated three points of particular interest to it:

“a. Investment products which have virtual currency as an underlying (sic!): these are ‘traditional’ investments which do not necessarily require the investor to use virtual currency to make the investment. 

b. Investment in virtual currency based assets/securities, and the transfer of those assets/securities

c. Other uses of the distributed ledger in relation to investment”

The Commission states that Europe is becoming one of the key centres for bitcoin investment:

“Two regulated companies based in Europe currently offer contracts for differences in bitcoins and litecoins. Some exchange platforms offer futures and other derivatives on the BTC/USD, BTC/CNY, LTC/USD, and LTC/CNY exchange rates. However, most of these exchanges are unregistered and their locations are unknown”

The regulator’s experts also noted that two collective investment schemes involving bitcoins are located in Europe. The European Union is a hub for major exchange platforms: “Eleven of the 17 identified exchange platforms seem to be located in Europe”, the Commission states.

At the end of the enquiry, the Commission poses questions about “further [virtual currency] investment products” and asks members to clarify definitions suggested by the regulator. Interestingly enough, the document’s tend avoid the use of the word “bitcoin” in favour of a broader “virtual currencies” term.

The Commission will receive opinions from members of the ESMC Stakeholders group. These include prominent academics and representatives of the financial industry. The group’s head is Jesper Lau Hansen from the University of Copenhagen. A CoinFox analysis of the work of the academics involved did not reveal any connection between them and recent research on bitcoin and the public ledger.

Roman Koritzsky