According to a recent report from a Belgian think tank, European Union (EU) must have common rules for cryptocurrencies. There should be standard guidelines on cryptocurrencies and their use across the member states.
The report was released by a Brussels based think tank Bruegel and sent to the finance minister of the economic bloc. The report comes just ahead of a meeting of economic and financial affairs ministers of EU on investment and taxation of cryptocurrencies in the digital economy.
The Bruegel report is not yet available publically but some suggestion which is made in the report are, there should be unified legislation for cryptocurrencies, more scrutiny on how cryptocurrencies are distributed to investors, and the authorities should keep an eye on the trading and distribution of cryptocurrencies.
The report has a separate section for crypto exchanges and Initial Coin Offerings (ICOs). It became necessary to include the crypto exchanges and ICOs in the report because their numbers are expected to grow in the EU this year and for coming years. The Bruegel report states that EU should also enforce common regulations for ICOs and crypto exchanges in order to manage the associated risks and to take the advantage of blockchain technology. Though the decentralized nature of cryptocurrencies makes them difficult to regulate but companies which are operating cryptocurrency platforms can face stricter disclosure rules.
According to the Bruegel report, because of the extensive crackdown of cryptocurrency in Asia Hong Kong-based blockchain and crypto exchange, Binance is planning to move its headquarters to Malta and new EU rules on money laundering will put pressure on crypto exchanges and ICOs. Belgian think tank also claims that regulatory oversight will be left to national authorities.according to the think tank there is a scope for regulatory arbitrage which can be utilized to foster the opportunities. It is important to experiment and learn about the best practices of this fast-growing technology in order to take advantage of the latest technology.
There is a lack of transparency in the crypto industry. Cryptocurrencies can also be used for money laundering, tax evasion, and terrorist financing. So it becomes important to regulate the industry.