The European Commission, the executive branch of the European Union, has announced its plans to regulate digital currency. Such regulations will be introduced over the next four years.
The European Commission noted that it was important to mitigate any potential risks for users and investors while still fostering innovation. Such mitigation invariably leads to the formation of a regulatory framework to guide and oversee the crypto ecosystem.
Following the presentation of the regulatory proposals, European Commission Executive Vice-President Valdis Dombrovskis reiterated the imperative of protecting consumers while still promoting innovation. He said, “The future of finance is digital. There is a wealth of innovation out there for consumers and companies. But the digital transformation does not come without risks. So we will protect consumers while promoting innovation.”
He noted that the commission was looking at establishing centralized supervision for crypto assets in the area of capital markets. “Crypto-assets, given the cross-border nature of the business, is an area where a coordinated, centralized approach would be warranted,” he said.
Why does developing our capital markets more than ever now, at a time of crisis? ✅ More financing opportunities to help start-ups ✅ help larger companies to thrive ✅ more opportunities for Europeans to invest safely ✅ Support the recovery #CMU pic.twitter.com/4cQjIY02NL
— Valdis Dombrovskis (@VDombrovskis) September 24, 2020
Dombrovskis further noted that the new legislation would enable the EU to reduce “market fragmentation.” He explained that, under the proposed regulations, any crypto-asset firms authorized by one of the 27 EU countries will be able to offer its services across other member states. He highlighted that many of the current blockchain/crypto companies are confining their activities to within a single country.
Stablecoins would be supervised by the European Banking Authority
Dombrovskis also noted that the new legislation would be tougher on firms that issue stablecoins. He explained that the new legislation was not meant to stifle innovation. The goal is to set clear guidelines on the operation of digital currency while still protecting investors.
According to him, under the proposed plan, stablecoin issuers would be supervised by the European Banking Authority, a Paris-based EU agency.
The new initiative would also set requirements for the crypto industry on everything ranging from capital requirements to governance standards. This would be in exchange for the firms and their products to be allowed in the EU space.
EU blockchain regulatory sandbox
In line with its agenda to regulate digital currency, the European Commission disclosed that it is collaborating with the European Blockchain Partnership (EBP). The goal is for the EBP and public sector to “play a trailblazing role in blockchain by building its own blockchain backbone infrastructure for cooperation across borders.”
The future of finance is digital.
— European Commission 🇪🇺 (@EU_Commission) September 24, 2020
This Pan-European blockchain regulatory sandbox is going to be a facility that would enable regulators, firms, and tech experts to interact, cooperate, and test innovative solutions in the blockchain sector.
For more on the push for adoption for stablecoins and other crypto-assets in the EU, check out the Altcoin Buzz YouTube channel.