The European Securities and Markets Authority (Esma) is to undertake an investigation into the use of virtual currency or distributed ledger technology in the capital markets.
Esma says it has been monitoring and analysing virtual currency investment over the last six months in a bid to understand the potential benefits or risks for investors and market integrity or financial stability issues.
"There are now facilities available to use the blockchain infrastructure as a means of issuing, transacting in and transferring ownership of securities in a way that bypasses the traditional infrastructure for public offer and issuance of securities, trading venues like exchanges and central securities depositaries or other typical means of recording ownership," states the regulatory body. "Esma would like to find out more about these market developments and in particular to know to what extent the use of the blockchain could enter the financial mainstream, and how it could be used."
It is inviting market participants and other stakeholders to submit feedback and any additional information on the following topics:
- Virtual currency investment products, ie collective investment schemes or derivatives such as options and CFDs that have virtual currencies (VCs) as an underlying or invest in VC related businesses and infrastructure;
- Virtual currency based assets/securities and asset transfers, ie financial assets such as shares, funds, etc. that are exclusively traded using virtual currency distributed ledgers (also known as block chains);and
- The application of the distributed ledger technology to securities/investments, whether inside or outside a virtual currency environment.
The consultation will be open until 21 July 2015.
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