A few days ago, crypto users got a glimpse into the EU commission’s digital assets regulation strategy. In a 167-page draft document leaked online on Sep. 10, the commission showcases ambitious plans to foster innovation in the nascent crypto industry across Europe.
As per the draft document, Europe can build on a secure legal foundation on crypto-asset regulation to emerge as a sector leader. The commission intends to develop a sound legal framework that clearly defines all crypto-assets’ regulatory treatment.
Moreover, the EU regulators highlight the importance of support innovation in the distributed ledger tech (DLT) space. In this way, the EU zone will benefit from a safe and proportionate framework that gives an edge to companies and investors operating in Europe.
The eagerly awaited Proposal also notes the importance of integrating appropriate consumer and investor protection levels in the crypto sector.
Regulators Still Jittery about Stablecoins
The leaked draft showcases that the EU commission is a progressive body that understands the need for precise crypto regulation.
This Proposal has been two years in the making, but EU officials admitted to accelerating their efforts in the wake of the Libra Stablecoin.
Regulators in Europe long expressed concern of the potential for the stablecoin to gain traction among its base of 2.7 billion Facebook users.
The main concern is that Libra could destabilize the fiat system and enable illegal activities such as money laundering.
As per a recent Reuters report, major EU countries such as Germany, France, Italy, and the Netherlands have threatened to ban Libra’s use in their jurisdictions. They specifically claim that stablecoins shouldn’t be allowed in the EU until regulatory and oversight challenges are addressed.
The leaked EU proposal conveniently addresses such concerns by proposing stringent regulation to monitor cryptocurrencies it considers “significant,” such as Libra.
As per the Proposal, EU member states will form a new college of supervisors to develop crypto regulation legislation. The regulations will apply proportionately to the level of risk posed by each crypto asset.
Therefore, assets viewed as “significant e-money tokens” will face stricter requirements on supervision and KYC obligations.
EU Commission Draft Explicitly Mentions Security Tokens
The proposal mentions security tokens that are of particular interest to the crypto community. In turn, it suggests that the EU Commission is warming up to this emerging asset class.
The document states:
“Enhanced legal certainty by legislation and/or guidance at EU level could facilitate the take-up of primary and secondary markets for ‘security tokens’ across the single market.”
The European Parliament will debate the draft proposal shortly. If adopted, individual Member States will have to implement the Proposal without further interpretation at the state level.