The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have separately called for standardized cryptocurrency regulations across the European Union.
The EBA, a major regulatory agency of the EU has requested the European Commission to look into the possibility of having unified cryptocurrency regulations across the region. According to a report recently published by the EBA, it claims that the EU currently does not have a well-defined set of laws regarding digital currencies and as such, cryptocurrency transactions and crypto-related businesses do not fall under the purview of European financial laws.
As such, these activities are “highly risky” and appropriate rules need to be put in place to safeguard the interests of investors.
The EBA’s Executive Director, Adam Farkas stated that,
“The EBA’s warnings to consumers and institutions on virtual currencies remain valid. The EBA calls on the European Commission to assess whether regulatory action is needed to achieve a common EU approach to crypto-assets. The EBA continues to monitor market developments from a prudential and consumer perspective.”
The second agency, the ESMA is also a regulatory agency in the region, which has recently published a report on crypto assets and ICOs. It advises the EU’s Commission, Council and Parliament on the existing rules that could be applied to crypto assets and further sets out any regulatory gaps to consider for policymakers.
Additionally, the regulatory body said that given the nature of cryptocurrencies, they probably fall under the EU’s MiFID financial framework and can thus be classified a “financial instruments”, which is arguably the very first step forward in regulatory measures for cryptocurrencies. However, it also added that there need to be some adjustments to the current framework for cryptocurrencies to fit in.
ESMA’s Chair, Steven Maijoor said,
“Our survey of NCAs highlighted that some crypto-assets may qualify as MiFID financial instruments, in which case the full set of EU financial rules would apply. However, because the existing rules were not designed with these instruments in mind, NCAs face challenges in interpreting the existing requirements and certain requirements are not adapted to the specific characteristics of crypto-assets.”
According to the statement, it seems that EU’s legal and regulatory framework already has an upper hand when compared to other countries across the world who are still struggling to agree upon a proper legal definition for “cryptocurrency”. As such, the work ahead for the authorities is to make suitable adjustments to the existing rules to ensure that consumers and entrepreneurs looking to tap into these emerging markets have their interests and rights protected.