A new report published January 9 by the European Banking Authority (EBA) has recommended further research into cryptocurrency and is calling for a number of actions to be carried out in the cryptocurrency sector throughout 2019.
The report delves into the standardization of regulations pertaining to cryptocurrency businesses operating within the European Union, and the EBA believes this is a much-needed move to eliminate unfair regulatory arbitrage and protect investors.
“Applicability and Suitability of European Union Law to Crypto-Assets”
In the newly-released document, Europe’s banking watchdog (EBA) admits that cryptocurrency and crypto-related businesses do not fall under the European Union law.
As stated in the document’s summary:
Typically, crypto-asset activities do not constitute regulated services within the scope of EU banking, payments, and electronic money law, and risks exist for consumers that are not addressed at the EU level.
Now that the EBA has addressed that the crypto sector requires a new standardization of regulation to comply with European law, they have recommended that the European Commission carry out further analysis in order to take action.
The EBA is beginning to tackle the issue of cryptocurrency regulations because different cryptocurrency laws among member states would create undesirable regulatory arbitrage, unfair competition, and a congregation of crypto businesses in countries with less stringent rules.
Overall, the report is focused on the research and analysis of issues relating to crypto-assets and businesses. The EBA is simply calling for a nuanced approach to developing a regulatory framework with rules and standards for the emerging asset class.
The EBA report noted:
Given the pace and complexity of change, it would be desirable for a technologically neutral and future-proof approach to be adopted in developing any proposals should it be concluded that EU-level action is needed.
Other Crypto and Blockchain Initiatives in Europe
While the EBA is just now taking initiative to develop a standardized regulatory environment for the cryptocurrency sector, other countries in the EU have already been addressing cryptocurrencies and blockchain technology.
For instance, 7 European Union countries have formed what they are calling the “Mediterranean Seven,” which aims to improve blockchain education, increase awareness, and spur the usage of blockchain technology across an array of industries.
This “Mediterranean Seven” initiative was largely started because of the EU’s struggles in gaining a strong foothold in blockchain and cryptocurrency.
Another example of EU members taking blockchain and crypto into their own hands is the Italian government which recently established a 30-member blockchain advisory board.
All in all, regulatory clarity is needed in the blockchain and crypto industry so that businesses can flourish and investors can be protected. The EBA has addressed this need and we can expect to see some regulatory improvements as we head into 2019.
Do you think the EBA will actually establish any kind of cryptocurrency regulatory framework this year? If so, will it foster or hinder blockchain and crypto innovation? Let us know what you think in the comment section below.