>>Read full position paper from June 2019
Updated: October 2020
ESBG believes that European policymakers should put in place a classification that is flexible enough to
accommodate for technological progress and that a transitional regime could lead to a detailed classification.
EU supervisors and NCAs first need to take initiatives and provide guidance; then EU legislators should
enlarge the scope through a general/high-level cryptoasset classification and finally provide regulation for
areas that do not fall under EU legislation.
Since the publication of the FinTech Action Plan in March 2018, the European Commission has been closely looking at the opportunities and challenges raised by crypto-assets and evaluating the suitability of the existing financial services regulatory framework on crypto-assets.
In January 2019, the EBA and ESMA reports pointed out that while some crypto-assets fall within the scope of EU legislation, effectively applying it to these assets is not always straightforward. Moreover, there are provisions in existing EU legislation that may inhibit the use of certain technologies, including DLT. At the same time, the EBA and ESMA have pointed out that most crypto-assets are outside the scope of EU legislation and hence are not subject to provisions on consumer and investor protection and market integrity. Finally, a number of member states have also legislated on issues related to crypto-assets which are currently not harmonised.
In September 2020, the European Commission proposed a comprehensive framework that will protect consumers and the integrity of previously unregulated markets in crypto-assets. The ‘Regulation on Markets in Crypto Assets' (MiCA) will boost innovation while preserving financial stability and protecting investors from risks. The new rules will allow operators authorised in one Member State to provide their services across the EU (“passporting”). Safeguards include capital requirements, custody of assets, a mandatory complaint holder procedure available to investors, and rights of the investor against the issuer. Issuers of significant assetbacked crypto-assets – so-called global ‘stablecoins' – would be subject to more stringent requirements, such as in terms of capital, investor rights and supervision.
In addition, the European Commission proposed a pilot regime for market infrastructures that wish to try to trade and settle transactions in financial instruments in crypto-asset form. The pilot regime represents a so-called ‘sandbox' approach – or controlled environment – which allows temporary derogations from existing rules so that regulators can gain experience on the use of distributed ledger technology in market infrastructures, while ensuring that they can deal with risks to investor protection, market integrity and financial stability. The Commission is also proposing some related amendments where current legislation presents clear issues to the application of distributed ledger technology in market infrastructures
These proposals respond to most of the ESBG priorities and if adopted will ensure a level playing field that has been one of ESBG main demands for the last years.