Just last week some reports surfaced that the European Union is reportedly planning to merge cryptocurrencies and blockchain technology in its main processes by 2024. Today, the European Commission has officially proposed a regulatory framework for cryptocurrencies and stable coins.
According to a 168-page official draft proposal published Thursday, the EU has acknowledged the need for a “sound” legal framework that will define the regulatory policies to govern all crypto-assets that aren’t being covered by the existing financial services legislation.
The commission states that digital assets and stablecoins have the capability to be accepted on a global scale, and hence these assets would be subject to “more stringent requirements” regarding capital, investor rights, and supervision.
The commission has now proposed a “bespoke” regime for cryptocurrencies and stablecoins.
“The bespoke regime for crypto-assets will ensure a high level of consumer and investor protection and market integrity, by regulating the main activities related to crypto-assets.”
These main activities include various crypto-based services like exchanges and wallets.
“By imposing requirements (such as governance, operational requirements) on the main crypto-asset service providers and issuers operating in the EU, the proposal is likely to reduce the amounts of fraud and theft of crypto-assets,” the draft said.
“The bespoke regime will introduce specific requirements on e-money tokens, significant e-money tokens, asset-referenced tokens and significant asset-referenced tokens in order to address the potential risks to financial stability and monetary policy transmission these can present. Finally, it will address market fragmentation issues arising from the different national approaches across the EU.”
European Regulators Focus on Blockchain
Furthermore, a regulatory sandbox has also been proposed to help new companies test out blockchain technology in services like trade and settlement processes.
The draft is a part of the commission’s newly adopted Digital Finance Package, designed to “boost Europe’s competitiveness and innovation in the financial sector, paving the way for Europe to become a global standard-setter.”
“It will give consumers more choice and opportunities in financial services and modern payments, while at the same time ensuring consumer protection and financial stability,” it added.
Last week’s report revealed that the commission is seeking instant payments to become more common especially in a time where the COVID-19 pandemic has fuelled cashless payments.
The commission also wants to deploy blockchain technology to make data sharing within the financial sector more streamline to encourage competition and result in the creation of a wide variety of services.
