Crypto companies, such as trading platforms, would need a physical presence in the European Union and would be subject to capital requirements.
The European Union is taking an important step to regulate crypto assets in the block, seeking to protect its financial markets without depriving citizens and companies of new technologies.
Under the initiative presented on Thursday, the executive arm of the European Union seeks to establish clear ground rules for cryptocurrencies, which are often not included in traditional rules and can leave investors unprotected.
The proposal, considered one of the most comprehensive in the world, also seeks to regulate so-called stablecoins like Facebook’s Libra, which has been treated as a wake-up call by regulators, because it could reach a large number of users and even threaten the financial stability.
“We must embrace digital transformation proactively, while mitigating any potential risk. An innovative and digital single market for finance will benefit Europeans and be key to Europe’s economic recovery, by offering better financial products for consumers and opening up new financing channels for businesses, ”said Valdis Dombrovskis, Executive Vice President of the European Commission, in a statement.
Under the new rules, crypto companies, such as trading platforms, would need a physical presence in the European Union and would be subject to capital requirements, the commission said. The most important stablecoins would be supervised by the European Banking Authority.
The finance ministers of the bloc’s biggest economies this month renewed their call for strict controls on projects like Libra.
The proposal now faces a debate between the European Parliament and national governments before becoming law. The commission said it plans to have a framework for crypto assets in 2024.
Changes in supervision
The supervision of emerging types of financial firms has come to light after the spectacular collapse of Germany’s Wirecard AG, a payments company that classified itself as a technology company and therefore operated under less strict supervision than lenders. traditional.
As part of a new push to develop the fragmented capital markets of the European Union, also unveiled on Thursday, the commission now plans to assess whether existing regulations for that industry are working as intended and are being applied by national authorities as they should.
“Truly integrated and convergent oversight is needed to ensure a truly level playing field for all market players. This will be particularly relevant in a post-Brexit world, with multiple financial centers in the European Union, ”he said in his latest action plan on how to develop the so-called capital markets union project.
However, more harmonized supervision has been a difficult issue for national governments. They significantly reduced a 2017 proposal from the commission to strengthen supervisors at the European level, preferring to keep more power within their borders.
However, that approach was called into question when the Wirecard case revealed significant deficiencies in Germany, prompting reforms in the country and an investigation by the European Union market supervisor. The commission said it would have to wait for the results of the investigation before taking more concrete action.