EU nears completion of cryptocurrency regulatory framework
EU Commission seeks to develop a single market for digital assets
The European Commission is almost ready to publish its proposals for the European Union’s first digital finance and cryptocurrency regulatory framework, according to IFC Review.
Since the digital asset sector burst into existence in the past decade, European lawmakers and regulators have simultaneously been excited and concerned by the burgeoning technology.
The privacy enabled by the likes of Bitcoin raised hackers, especially during the early free-wheeling days when crypto frauds were more frequent, the dark web less scrutinised and everyday Europeans less informed.
Projects such as the Facebook-led Libra Association have propelled both regulatory hostility and central bank research and development. Shortly after the finance ministers of France and Germany vowed to ban Libra as a threat to nation states, the states within the European union stepped up their interest in central bank digital currencies (CBDCs).
The growing interest of institutional investors and major corporations in digital assets has made the EU’s need for a developed framework more urgent.
IFC Review outlined the priorities of the EU Commission as such:
"Firstly, a regime for blockchain-based platforms. Secondly, the definition of all forms of cryptocurrencies, including stablecoins and security tokens. Thirdly, the inclusion of crypto assets in the to the Markets In Financial Instruments Directive II (‘MiFID II’ Directive 2014/65/EU)."
The framework will also seek to develop a single market, through which digital assets can be sold throughout the economic and political union, without the need for cross-border payments.
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Such a measure would supplant current national frameworks and require digital asset service providers to apply for authorisation from a central EU body in order to operate anywhere within the region.
Discussing the upcoming regulations, Bruno Schneider–Le Saout, who heads up the crypto advocacy group European Blocktech Federation, stated:
“The new legislation will provide legal certainty, which is needed both for crypto-assets that are not covered by existing EU financial services legislation and for the application of DLT in financial services and the tokenisation of traditional financial instruments.”
Although the proposals are expected to be published and adopted at some point during the current quarter, the Commission’s press office has admitted that the Covid-19 crisis could cause some delays.
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