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The European Union has decided to regulate the whole world of the crypto assets, including the stablecoins (they are virtual currencies that unlike the Bitcoin have a stable price when bound to a means of exchange such as a currency). A crackdown was announced on Thursday 24 September by the EU Commission with the presentation of its (first) proposal for regulation.
The aim is “to provide legal clarity and certainty for those who issue and supply crypto-assets”, reads a note issued by Brussels. The new rules intervene on several fronts, starting with the formation of a single market for services, which will allow operators to move between Member States with a sort of passport (a bit like success with the birth of the Ucits market for mutual funds); they also set a series of minimum requirements that cryptocurrency providers will have to comply with (including minimum capital requirements and custody of assets), as well as intervening on technological security to avoid hacking risks. Moreover, all providers will have to have a physical presence in the Union and will be subject to supervision by Eba (the European Banking Authority) to prevent their instruments from jeopardising financial stability and consumer protection in many Member States.
“In fact, this first regulatory proposal creates a set of rules for all those crypto assets that are not considered financial instruments – explains Andrea Pantaleo, Dla Piper’s lead lawyer -. For all the others (those that can be assimilated to financial instruments, editor’s note), on the other hand, the regulations already in force, such as Mifid 2, will apply. The problem is that there are still no precise indications on how to assess whether or not a crypto asset can be assimilated to a financial product. One aspect that I think will be regulated through adjustments to the financial regulations, as well as through Q&A and guidelines”.
Also because it will be necessary to find a common line to all Member States, especially considering that the Union’s objective is to create a single European market for services. For the time being, however, the regulatory framework put in place by the EU Commission is only a proposal, which will have to be approved by Parliament. The timing is not certain, “with the new rules that will apply 18 months after entry into force”, Pantaleo points out (for Titles 3 and 4 of the regulation, concerning stablecoins and money tokens, the timing could be shorter).
But when this new regulation comes into force, what will actually change for the cryptocurrency market? According to Massimo Siano, head of South Europe at 21Share, the impact will certainly be positive: “Most likely the EU is playing ahead of the US with the aim of creating a regulatory market that can attract global capital. To secure the sector means to stimulate the demand for virtual currencies, also thanks to the use of a community passport, which eliminates the bureaucracy in the offer of services on the whole territory of the Union. That one of the cryptocurrency is a niche of market in strong growth, but still to the dawns – it still adds Siano -. And in order to continue to grow many capitals are needed, that surely will arrive if an adequate legal structure is created”.
Christian Miccoli, co-founder and co-ceiver of Conio (digital wallet to buy and sell Bitcoin) also talks about quite reasonable regulation, especially with reference to the creation of a single European market for services. But at the same time he warns about the growth potential of the sector: “If the new rules intervene on the security of investors and on a single legislation that facilitates the offer of services in the different member states then we are on the right track – he argues – But if we start to intervene on the capital requirements we risk putting a brake on the spread of virtual currencies”.
There is supplier and supplier of cryptocurrency, explains Miccoli: “To preview of the patrimonial requirements on who manages deposits, like the exchangers, is right. Striking instead also the small start-ups that put themselves on the market as simple wallets, instead, it risks to provoke a slowdown of the development and the innovation. And Europe must now run faster and not slow down, especially if it wants to make Amazon finance born in the Old Continent,” he concludes.