European Commission seeks public consultation on an EU framework for cryptoassets

The European Commission (EC) published a consultation document in search of opinions on a regulatory framework for markets in cryptoassets.

In March 2018, the EC adopted the Fintech Action Plan combining supportive measures to present FinTech solutions and proactive measures to foster and stimulate new solutions, attending in a determined way the emerging risks and challenges. These actions have largely been implemented by the European Union (EU) members. As a next step, in order to promote digital finance in Europe, while adequately regulating its risks, the EC is now busy working towards a new Digital Finance Strategy (DFS) for the EU. Part of this new DFS is the transformative technology of Blockchain. Cryptoassets are one of the major applications of Blockchain for finance.

Since the publication of the FinTech Action Plan in March 2018, the EC has been closely looking at the opportunities and challenges raised by cryptoassets. The EC authorised, in previous years, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) to assess the applicability and suitability of the existing financial services regulatory framework to cryptoassets. A new subsection of cryptoassets, “stablecoins”, was also discussed, as it drew the attention of the public and the regulators around the world.

Building on the advice from the EBA and ESMA, the EC has published their aforementioned Consultation document which aims to inform the EC services’ ongoing work on cryptoassets in relation to cryptoassets that are covered by EU rules, by virtue of qualifying as financial instruments under MiFID II or as electronic money/e-money under the Electronic Money Directive (EMD2). For cryptoassets that are currently not covered by the EU legislation, the EC services are considering a possible common regulatory approach at EU level to address, inter alia, potential consumer/investor protection and market integrity concerns.

The EC is inviting stakeholders to express their views by 12 March 2020.

EC’sc consultation document can be found here.

EC’s Fintech Plan can be found here.