On January 8, the European Securities and Markets Authority (ESMA) has announced its plans to focus on data security in the financial industry; especially for crypto assets. ESMA published its 2020-2022 priorities on Thursday claiming that the European markets are facing new challenges from digitization.
Moreover, the agency warned market participants to acknowledge and be prepared for these particular risks. The document reads:
“ESMA will [..], together with NCAs, also require EU market participants to acknowledge the risks that may stem from digitalization by ensuring business continuity and the use of adequate and up-to-date technology, as well as adequate protection against cyberthreats, and through proper data protection and data quality management. The dangers of cyberthreats to the financial system as a whole and a sound legal framework for crypto-assets are increasingly becoming areas of focus for ESMA together with the other ESAs; the ESRB, the ECB and the European Commission.”
Retail Customers are the Most Affected
Moreover, as mentioned by the watchdog, its activities for the coming years are planned based on the problems faced by the EU; citizens and the capital markets. ESMA will also focus on creating a huge retail investor base to help support CMU. This will in turn promote sustainable finance and long term markets; helping sort the opportunities and risks posed by digitization.
In addition, ESMA was closely monitoring the digital assets industry. Last year it issued its advisory on initial coin offerings(ICOs) and crypto-assets, highlighting that some crypto-assets may qualify as MiFID financial instruments. Steven Maijoor, the chairperson of ESMA said:
“The new Strategic Orientation sets out how we will exercise our new powers; and meet our new responsibilities, in pursuit of our mission of enhancing investor protection; and promoting stable and orderly financial markets in the EU.”
In conclusion, the ESMA is an independent EU body; mandated with safeguarding the stability of the European Union’s financial system; by enhancing the protection of investors and maintaining stable and orderly financial markets.