Commission reveals EU regulation on cryptocurrency and blockchain
The European Union Commission plans to unveil the most concise rules on cryptocurrency and blockchain infrastructure to encourage financial innovations.
The European regulatory framework in the field of crypto and blockchain
According to the recent Reuters media report, the European Commission plans to encourage financial innovation by implementing the most comprehensive rules related to cryptocurrencies and blockchain technology. When region-wide regulations were not suitable, individual EU member States began to introduce their own rules and sets of rules. According to the European Commission, they plan to reject the initiatives of member States by issuing “regulatory stamps” that will essentially replace the rules introduced in other countries.
Introduction of ‘Passports’
According to the statement, they plan to implement a structure where cryptocurrency issuers and service providers must apply for a passport that gives them access to the single market in the Euro area to work and serve customers. When obtaining a passport, investors in the digital asset space can be sure that the regulator has checked these organizations before registration.
Companies that plan to operate in the EU can be expected to meet certain criteria, such as capital requirements, asset retention, investor rights in relation to issuers, and others. It is important to note that, on the basis of Commission’s forecast, issuers of global stablecoins are expected to follow even stricter protocols.
It seems that regulators are beginning to understand the significance of this sector, taking a much more proactive approach this year. This is not just happening in Europe. Other geographical regions, such as Nigeria, have already taken regulatory measures. Nigeria planned to introduce a more rational approach from the point of view of companies and other service providers in this market. This was done to prevent startups from working with unregistered securities.
How it will be presented
It is assumed that the so-called “Euro sandbox”will operate in the European Union to study the structure. The sandbox allows you to temporarily evaluate new procedures. Initially, companies working in the field of cryptocurrency / blockchain were exempt from the rules in order to evaluate the environment around various products and services. The Commission notes that similar approaches have been used in the UK for several years.
Many analysts in this sector believe that startups and other companies will eventually have to work with regulators if the market expects mass adoption. For a long time, the European Union has been extremely divided in terms of regulating crypts and blockchain technologies. For example, regulation of the exchange of crypto assets was largely ignored, leaving it to the discretion of member States. Due to the lack of regional control, member States were forced to create their own rules.
This behavior makes it extremely difficult for startups to scale their project. The lack of transparency in regulation makes it virtually impossible to mass adoption. Since the European Commission plans to reject such initiatives, this will improve the situation for promoting financial innovation.