The EU regulator warned that a sharp rise in inflation could lead investors to cryptocurrencies, and called for the creation of a single regulatory framework.

The European Securities and Markets Authority (ESMA), the EU’s top securities markets regulator, has warned that skyrocketing inflation could push retail investors toward cryptocurrencies, Bloomberg reported.

The regulator noted that “there is an imbalance” in how each EU country treats cryptocurrencies, and called for the creation of a single regulatory framework for all European countries.

ESMA chairwoman Verena Ross said in an interview last week:

“As inflation rises, investors will look for investments that can try to offset inflation and bring in greater returns, which could lead to more risky action.”

“It’s something we’re watching very closely,” she said.

Many investors believe that Bitcoin is an excellent means of protection against inflation, for example, the famous hedge fund manager Paul Tudor Jones. However, the crypto asset is very volatile; Over the past 30 days, the price of Bitcoin has fallen by 26%. This month, the cryptocurrency market as a whole lost about $ 500 billion.

Currently, EU countries are setting their own rules regarding cryptocurrencies, based on local laws. There is no single framework for the cryptocurrency sector.

And the ESMA chairwoman settled on this:

“There is currently no regulatory framework in the EU for this kind of organisation, so there is now an imbalance in how national supervisors treat these organisations and how they assess them.”

“This is where the overall regulatory framework will help.”

Last month, the European Parliament gave ESMA the authority to regulate the activities of crypto-emitters and service providers.

Currently, the European Parliament and the European Council are considering the Crypto Asset Markets Bill (MiCA). The legislation, introduced in 2020, provides a legal framework for the development of crypto asset markets in the EU.