The European Securities and Market Authority or ESMA has called on the international payments community to supply information on virtual currencies like Bitcoin in order to allow ESMA to carry out an investigation into the use of virtual currency or distributed ledger technology in the capital markets. According to ESMA, it has been monitoring and analyzing virtual currency investment over the last six months to determine its market integrity or financial stability potential.
According to ESMA, it is inviting market participants and other stakeholders to submit feedback and any additional information on the following topics including virtual currency investment products, virtual currency based assets/securities and asset transfers and whether the application of the distributed ledger technology to securities/investments makes sense.
Commenting on the announcement, ESMA wrote in the release,
“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. 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.”
While not directly applicable to the payments industry, the announcement by ESMA highlights the broad applications that Bitcoin and other digital currencies can be used in. Today, bitcoin and other digital currencies have focused on “traditional” payment systems but increasingly there use is being diversified into peer-to-peer lending and other financial services. Thus the potential opportunity and role these digital currencies can play across payments and other industries should not be underestimated.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at
Mercator Advisory Group
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