European Commission Introduces Proposed Regulatory Framework for Crypto Assets

European Commission officially releases regulatory sandbox for crypto-assets and stablecoins. Commission has made it clear that regulations are important for the growth of the digital sector.

Regulations for Stablecoins

The official regulatory proposal comes after a draft leaked one week earlier. The official draft proposal of EC consists of 168 pages which clearly define crypto assets as well as stablecoins. It was necessary for legal certainty as current EU legislation does not cover it properly.

According to the European Commission, stablecoins have more potential for mainstream adoption. So, issuers of stablecoins are subjected to special requirements in terms of investor rights, capital, and supervision.

EC has today released a comprehensive regulatory framework for digital assets, especially stablecoins. EC stated,” The bespoke regime for crypto-assets will ensure a high level of consumer and investor protection and market integrity, by regulating the main activities related to crypto-assets.”

Need for Rules and Regulations

The increasing number of scams and theft attacks has also forced EC to roll out a regulatory sandbox. “By imposing requirements (such as governance, operational requirements) on the main crypto-asset service providers and issuers operating in the EU, the proposal is likely to reduce the amounts of fraud and theft of crypto-assets,” the Commission added.

“The bespoke regime will introduce specific requirements on e-money tokens, significant e-money tokens, asset-referenced tokens and significant asset-referenced tokens in order to address the potential risks to financial stability and monetary policy transmission these can present. Finally, it will address market fragmentation issues arising from the different national approaches across the EU.”

Besides introducing proposed regulations, EC has also asked companies to utilize blockchain technology in their operations such as settlement processes and trade.

And the proposal is included in the Digital Finance Package of the European Commission. Commission’s package will “boost Europe’s competitiveness and innovation in the financial sector, paving the way for Europe to become a global standard-setter.”

“It will give consumers more choice and opportunities in financial services and modern payments, while at the same time ensuring consumer protection and financial stability,” Commission added.

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