EU proposes first set of Principles for crypto assets
The European Union has taken a significant step forward in its bid to regulate the crypto assets world following its own executive branch issued its extensive proposals so far for overseeing the growing sector.
Tye measures suggested within the EU's digital finance strategy include cryptocurrencies not presently included in general regulation as well as a lot of so-called stablecoins.
The goal is not to only reduce volatility in cryptocurrency trading or to provide more regulatory certianty for investors but also to reduce market fragmentation in Europe by ensuring that once a crypto trading organization is approved in one EU state, it's free to operate in other EU states.
"We must proactively embrace digital transformation, while mitigating any potential risks," said Valdis Dombrovskis, executive vice-president of the European Commission. "A digital and innovative single market for finance will benefit Europeans and be key to Europe's economic recovery by delivering better financial products for consumers and opening up new financing channels for businesses."
The Regulation on Markets in Crypto Assets or MiCA bill provides defintions on which constitutes a crypto asset as well as various token sub categories. It will also lay down rules for electronic asset custody and funding requirements as well as the relationship between token issuers and token holders.
The bill also stipulates that suppliers of any crypto-based encryption services have a physical presence within the EU.
There are also measures to deal more info especially with stablecoins following issues raised by a number of finance ministers within the EU earlier this month.
If the bill is passed it would make the EU among the most regulated centers for crypto trading and digital assets. However, there's likely to be a lengthy legislative journey beforehand. The bill must be debated by both the European Parliament as well the different national governments before it could be passed into law. Meanwhile the Commission has said that it expects to see the framework set up by 2024.
The fact that any law must be implemented at a national level might prove to be a sticking point. The Commission has stated its preference for more regulatory harmonisation at an EU-wide level.
"Truly integrated and convergent oversight is needed to ensure a truly level playing field for all market players," stated Domborvskis. "This will be particularly relevant in a post-Brexit world, with multiple financial centres in the European Union."
But achieving harmonisation has proved difficult in the past and EU states have recently decreased a 2017 Commission proposal to bolster supervisory powers at an EU level in favour of preserving power at a national level.