The European Union's top securities watchdog has indicated that cryptocurrencies will be one of its top priorities in 2018.

In its latest supervisory work agenda released on Feb. 7, the European Securities and Markets Authority (ESMA) outlined the five primary areas that the agency will focus on in the coming year.

One of the tasks for 2018 will be monitoring the development of financial innovation, which, as the agency specifically pointed out, includes cryptocurrency and blockchain technology.

The authority states:

"ESMA expects the rapid pace of financial innovation developments across the EU securities markets to continue in 2018. These developments influence the way in which securities are developed, traded and supervised. In turn, ESMA is undertaking material analysis on the emergence of such instruments as virtual currencies, such platforms as ICOs and such tools as the distributed ledger technology."

Notably, this is the first time that the watchdog has included cryptocurrency into its supervisory agenda, signaling the increasing scrutiny the regulator is applying to the growth of cryptocurrency and blockchain technology in the European region.

Just last month, the agency also announced that it is seeking public feedback on possible regulatory changes around cryptocurrency derivative contracts.

Elsewhere in the latest report, central banks of EU member states (collectively called the National Competence Authorities, or NCA) are also set to follow the ESMA's effort in 2018, focusing on questions about financial innovation in areas such as ICOs and cryptocurrencies.

EU flags image via Shutterstock

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