The EBA examining the necessity of crypto across the region
Two major regulators from Europe have separately called for crypto and ICO rules at the EU level. Firstly, the EBA or European Banking Authority, which is a regulatory agency of the European Union, urged the European Commission to examine whether unified cryptocurrency rules are necessary across the Europe.
In one report which was published on Tuesday, the EBA said that crypto asset-related activities will not currently fall under existing in Europe financial laws in Europe and, as such activities are highly risky, appropriate rules have to be put in place to protect the investors.
Hence, the EBA asked the commission to carry out a comprehensive analysis to determine what action may actually be required at the European Union level.
The executive director of EBA, named Adam Farkas, said that the warnings of their agency to consumers, as well as institutions on virtual currencies, remain valid. The EBA also calls on the European Commission to access if regulatory action is actually needed to achieve a common EU approach to crypto assets. The agency also continues to monitor market developments from a prudential and consumer perspective.
FATF expected to issue guidance for international crypto regulation in Europe
The agency also advised the commission to take into account some recommendations to be released by the FATF or Financial Action Task Force, which is the global money-laundering Europe watchdog, in June 2019.
The expectation from the FATF is also to publish guidance for some international crypto regulation covering crypto exchanges, digital wallet providers, as well as Initial Coin Offerings or ICOs.
In the meantime, during this year, the EBA said that it is going to take several steps in order to monitor the crypto sector, like developing a common monitoring template for crypto activities. Also, assessing business practices regarding advertisements in the industry in Europe also determining the treatment of the holdings or exposures of the banks to crypto assets, and even more.
The second regulatory agency in the economic bloc will be the ESMA or European Securities and Markets Authority, which also published a report on crypto assets, as well as ICOs yesterday. It actually advises the Commission, Council and the Parliament of EU on the existing rules which could actually be applied to crypto assets, as well as further sets out any regulatory gaps to consider for the policymakers.
The full set of EU financial rules will also be applied
Notably, it also says that some crypto assets may fall under the MiFID financial framework of EU and even be classed as financial instruments, even though several adjustments may also be required.
The chairman of ESMA, named Steven Maijoor, said that their survey of NCAs highlighted that some crypto assets may actually qualify as MiFID financial instruments, in which case the full set of EU financial rules is also going to apply. But, as the existing regulations have not been designed with these instruments in mind, NCAs face challenges in interpreting the current requirements, as well as several requirements which are not adapted to the specific characteristics of the crypto assets.
Another additional category of cryptos is not going to fall under MiFID, but it will still need to comply with anti-money laundering rules. Besides, risk disclosure has to be enforced too, in order to alert consumers to potential risks when they invest in crypto assets.
Maijoor said that to have a level playing field, as well as to ensure adequate investors protection across the European Union, they consider that the gaps or even the problems identified would be best addressed at the European level.