The European Commission Will Propose Rules For The Regulation of Cryptoassets in Fall 2020
In autumn, the European Commission will complete the development of digital finance market regulation and propose a clear definition of crypto assets for European legislation.
During the year, the highest executive body of the European Union, the European Commission, consulted with experts across Europe to develop recommendations for regulating the digital finance market, IFC reports. As a result of these consultations, a “working document” was created with clearly defined priorities for future regulation:
- Development of definitions for all types of cryptoassets, including stablecoins and stock tokens;
- Amendments to the Markets in Financial Instruments Directive (MiFID II) and the inclusion of cryptoassets in it;
- Development of rules for blockchain platforms.
“We expect this law to become historic for Europe,” said Bruno Schneider – Le Saout, chairman of the European Blocktech Federation, on the initiative. “This regulation will support the development of the digital finance industry in the EU for years to come.”
He also noted several important changes that will occur after the adoption of the new regulation:
“The new legislation will provide the legal certainty that is needed both for crypto assets that are not subject to the existing EU legislation on financial services, and for the use of DLT in financial services and the tokenization of traditional financial instruments. In addition, the definition of cryptoassets as “financial instruments” will emerge, which is crucial. It will include cryptoassets in a wide range of European and national legal instruments regulating the EU financial market, primarily MiFID II. “
There is also a need for a strict definition and legal framework for share tokens. Future regulation involves the creation of a “sandbox” in which it will be possible to test the operation of these tokens.
In addition, the legislation being developed includes the specifics of regulating market structures for cryptoassets. Currently, the operation of cryptocurrency exchanges is not sufficiently regulated, and this, as Schneider-Le South notes, leads to numerous scams and interruptions in the operation of exchanges.
The working paper proposes to create regulation establishing harmonious requirements at the EU level for issuers seeking to offer their crypto assets across the EU and cryptocurrency service providers seeking permission to provide their services in the single market.
This regulation will replace existing national laws applicable to cryptoassets. The legislation will include requirements for issuers of cryptoassets, requirements for operators of cryptocurrency services, special rules to ensure market integrity and rules for overseeing issuers, along with the powers of national executive authorities to ensure market integrity.
The European Commission plans to adopt the developed proposal in the third quarter of 2020. However, the press service of the executive branch notes that there may be delays in the work of the Commission due to the coronavirus pandemic.
As a reminder, in June, the Vice-President of the European Commission announced that the European Union is developing cryptocurrency regulation that will include stricter requirements for global stablecoins.