The Austrian Financial Market Authority Calls for Strict Regulation of ICOs and Cryptocurrencies

Board directors of the Austrian Financial Market Authority (FMA), Helmut Ettl and Klaus Kumpfmüller, have called for tighter regulation on initial Coin Offering (ICOs) and digital currencies.

The hype surrounding cryptocurrencies has also arrived in Austria since the record high of Bitcoin last December. This calls now also the supervision on the plan. It seems a big problem in the hitherto unregulated market and calls on the politicians to introduce rules that are comparable to those for the trading of securities.

The FMA, therefore, has two policy proposals on how cryptocurrencies should be more heavily regulated in the future. So there should be a “threshold-dependent” prospectus requirement for token ICOs after the model of those with securities. A minimum threshold of two million euros would be “reasonable”, says FMA board member Klaus Kumpfmüller, there should be concession obligation for distributors of digital currencies and that these “will be treated like securities in the future.”

Helmut Ettl analyzed the proposed regulation to existing restrictions on financial institutions “For the purchase and sale of foreign currency you need a mini-bank license.”  Ettl cites a US study that states that 80% of all initial coin offers (ICOs) are activities with a fraudulent background. Even in Austria “In the previous year, we submitted 50 factual reports to the prosecution, of which about 30 dealt with cryptocurrencies and initial coin offerings,” says Ettl.

FMA Board members showed their dissatisfaction with Austria’s Finance Ministers, Hartwig Loger, who needs the agency of some of its authority. For example, Loger explained in a “press” interview that he definitely wanted to dissolve the accounting examination from the FMA. Here there were “constant disputes” between the FMA and the auditing authority (OePR). In addition, supervision also needs more “regulatory responsibility at the ministerial level”. The supervisor should then execute these instructions reasonably. “The police do not write the laws that they then enforces.”

As per the Austrian Financial Market Authority (FMA) executive board, matter such money laundering have so far only been partially regulated by law, and further oversight by the ministry should be viewed as a positive development. Although there are “no serious problems” with regards to supervision and accounting, so a transfer of competences would possibly be regarded as “a political decision.” Helmut Ettl stated it was crucial that the FMA retains “integrated and independent supervision.”

Although, with regards to tightening regulation on digital currencies, the Austrian Financial Market Authority (FMA) and the Finance Minister are not so far apart. When Loger called stricter rules in the cryptocurrency sector in February, and for early regulation at the European level, both Klaus Kumpfmüller and Helmut Ettl accepted and offered their participation in a “FinTech Regulatory Council” recommended by Loger.

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