The European Union is set out to regulate crypto assets in the bloc, in the world’s most comprehensive set of rules to protect its financial markets while allowing the citizens and companies to be part of the new technologies.
“We should embrace the digital transformation proactively, while mitigating any potential risks,” said Valdis Dombrovskis, an executive vice president of the European Commission. Such a single market will benefit the people and be “key” to Europe’s economic recovery, he added.
Under the new rules, crypto firms like trading platforms would be subject to capital requirements and need to have a physical presence in the EU. European Banking Authority would be supervising the most important stablecoins.
Comprehensive Set of Rules for Crypto-assets
Crypto asset issuers and service providers would have to apply for a “passport” or EU-wide market access and safeguards for investors that include custody of assets, mandatory complaint holder procedure, rights of the investor against the issuer, and capital requirements.
With these, the aim is to offer a “regulatory stamp” to digital assets and blockchain firms while replacing national rules introduced in some EU states.
The EU will also introduce a pilot regime for cryptocurrencies covered by existing rules and companies that would be temporarily exempt in a controlled “sandbox” environment.
While the commission plans to have a framework for crypto assets in place by 2024, the proposal faces a debate between the European Parliament and national governments.
Germany Pledges to Speed-Up the Efforts
Amidst this, German Finance Minister Olaf Scholz pledged to speed up eurozone financial forms aimed at regulating crypto assets.
Scholz said on Tuesday that he welcomed the latest proposal and would put the reform packages that “can promote innovations in the financial sector so that Europe sets standards worldwide,” on the agenda of the next EU finance minister meeting on Oct. 6.
“These are important proposals to make Europe’s financial sector really strong. My goal is to move the discussions forward quickly,” he said.
Besides crypto-assets, a new push to develop the bloc’s fragmented capital markets was also unveiled with the commission now planning to assess whether existing regulators are working as intended, which came into the public spotlight after the collapse of Germany's Wirecard AG.
Scholz said the proposal to deepen the capital market would help the region recover more quickly from the coronavirus effect. “In order to get out of the crisis with full power, small and medium-sized companies in particular need good access to capital market financing,” he said.