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By Syed Rahman, of Rahman Ravelli, a UK and global law firm.

The European Union (EU) markets regulator has been warned that there is no widely-held consensus on how to value cryptoassets.

The warning was given to the European Securities and Markets Authority (ESMA) by the European Fund and Asset Management Association (EFAMA), which is the investment managers' trade association. It came as part of a consultation on whether cryptoassets should be accessible to retail funds.

Responding to a call for evidence from ESMA regarding the authority's rules covering which investments are allowed for retail funds, EFAMA said: "While most cryptocurrencies have self-imposed limits on their total supply which can help to maintain value, there is no consensus as to how to value cryptocurrencies and many have experienced high price volatility."

EFAMA added that while stablecoins are backed by a traditional currency such as the dollar, most digital assets have no inherent value based on underlying assets or potential cash flow. It said that if retail funds were to be allowed direct exposure to cryptoassets, it was important to make distinctions between different types of products.

Rules

Digital assets traded in conventional markets like shares or bonds are subject to the Markets in Financial Instruments Directive (MiFID), which is the regulation that increases transparency across the EU's financial markets and standardi......................

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