Vice President of the European Commission, Valdis Dombrovskis has expressed the intention for the EU to focus on the development of regulatory mapping and legal classification regarding crypto during a meeting of the Economic and Financial Affairs (Ecofin) Council in Vienna last week.
The EU’s appetite for regulation is one of the more popular lines of attack taken against it by dissatisfied (but sadly often misinformed, as the aftermath of the Brexit referendum has shown) voters and politicians who see the supranational institution as overstepping the mark and infringing on national sovereignty. It therefore remains one of the mysteries of the crypto space that the EU has up to this point shied away from authoring European crypto regulations and has instead left it to individual member states to create their own.
However, this may be set to change as Valdis Dombrovskis, Commissioner for the Euro and Social Dialogue as well as being one of four vice presidents for the Commission, announced that the Union would be looking to develop regulation of the crypto space on a supranational level rather than just a national one as currently exists.
Dombrovskis has emerged as one of the EU spokespeople on the subject of crypto over the last couple of years and this marks a new direction away from his assertion that the EU would merely “continue to monitor” the cryptocurrency space, made earlier this year.
During his announcement in Vienna he remarked that crypto assets are “here to stay,” as well as noting that the crypto market has continued to grow in spite of “recent turbulence”.
He explained that the main challenge which the Union faced was how to “categorize and classify” crypto assets within a financial framework. In approaching this problem, the Union will be looking more closely at whether crypto can fit under existing EU financial rules, or if a new framework needs to be constructed for this new asset type. It has also teamed up with national supervisory authorities from member states to establish a “regulatory mapping” of crypto assets and understand what steps need to be taken.
Whilst he was optimistic he stressed the need to bear in mind the problems of the crypto space, including money laundering, fraud, and hacking as well as how to protect market integrity and investors.
In order to effectively monitor these risks, Dombrovskis stressed the need for continued cooperation with other supranational institutions such as the Financial Stability Board (FSB) and G20 organization.
European level regulation for crypto is long overdue in the view of many. Brussels-based think tank Bruegel published a report that called for European-level regulation of crypto and tighter regulation of ICOs. The EU has not been dismissive of crypto and can be observed as being interested in safe and responsible development of the technology; initiatives like the EU Blockchain Observatory and Forum exemplify this. With so many areas of regulation homogenized within EU member states, extension of this to crypto would likely enable a more cohesive development of projects and spur growth of the industry in Europe as a whole.
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