A new prospective regulatory framework for stablecoins and cryptocurrencies have been put forward by the European Commission. This was revealed on the website of the organization, alongside the original documents themselves.
Building On What’s Established
This framework in question will regulate a number of aspects in regards to digital commerce. A significant focus of these regulations is on blockchain companies, called “DLT market infrastructures,” and cryptocurrencies, referred to as “crypto assets.” Alongside this, it provides rules in regards to the digital finance industry at large.
The Commission is planning to build on the existing rules already put in place, and notes that a select number of crypto assets can already be classified under existing laws. However, these laws predate blockchain and cryptocurrencies as they are known today. With this in mind, this new proposal stands to suggest a regime for market infrastructures that wish to handle transactions made by cryptocurrencies.
Planning To Regulate Each Asset Separately
Alongside this, the framework is planned to protect the consumers against the other, unregulated crypto markets. Through doing so, it will regulate crypto custodial wallet providers, custody services, as well as exchanges.
Further regulations come to the stablecoin space, which is a function that several countries within the EU had requested just earlier this month.
This proposed framework further aims to cover all forms of digital services and assets. This not only includes publicly traded cryptocurrencies, but also asset-backed tokens, utility tokens, e-money tokens, and stablecoins. The framework also establishes rules for companies handling assets on a decentralized ledger or DLT market infrastructures.
It should be noted that this proposal doesn’t treat all digital assets equally. That is, it doesn’t consider them all to be financial instruments. This is due to each asset having its own function and associated risks.
Trying To Boost Regulated Crypto In EU
The goal instead is to provide a level of “legal certainty” when it comes to these digital assets, allowing those in the European Union to feel less at risk when operating in this space, which is still legally gray for the most part.
More stipulations are under consideration, including mandating a digital finance service provider to have a physical presence within the EU in order to operate in it. Alongside this, capital requirements and government standards are to be implemented and will need to separate their own assets from their client assets.
These rules are restrictive, sure, but offer benefits alongside this, as well. A service that registers in one jurisdiction will be able to operate across the entire EU, doing so with an “EU passport.”