According to the European Commission, blockchain and crypto-actives is an opportunity for digital finance in Europe. To encourage the development of innovation, regulation must be completed and adapted according to the level of risk.
Europe intends to establish itself as a reference market for financial and digital players, such as FinTechs. The European Commissioner, Valdis Dombrovskis, in charge of the economy, acknowledges, however, that to achieve this, regulation must encourage innovation and experimentation.
This is particularly true in the areas of crypto-actives and distributed registry technologies. On the occasion of the Digital Finance Outreach 2020 conference, the Vice-President of the Commission has therefore set a new timetable.
Balance between supervision and innovation
Later this year, we will present a strategy for digital finance in Europe to make the most of digital finance and compete globally, removing more regulatory barriers between countries, while ensuring proper supervision,” he said.
And in this respect, crypto-active and blockchain will be Europe first test case. Indeed, the Commission believes that the lack of legal certainty is the “main obstacle” to the development of this market in the EU.
Valdis Dombrovskis stresses the importance of defining a common approach between Member States to support and stimulate innovation. A proposal for legislation will be presented at the end of the year.
However, some crypto-actives are already regulated. For these, the Commissioner suggests “adjusting the rules” to ensure that they are as appropriate as possible. This means, for example, allowing more flexibility for constantly evolving technologies such as blockchains.
We will propose a pilot project to give some regulatory flexibility to experimentation – but well supervised and closely monitored,” the European Commission representative said.
Stricter rules correlated to the level of risk
Future legislation will also have to take account of assets that are currently unregulated. For these financial products, the EU wants to create “a tailor-made regime and a passport for crypto-asset markets. »
According to Dombrovskis, the aim is to ensure that risks are taken into account and that investors and users have “a good understanding of them. “To reassure entrepreneurs, the vice president promises an approach that is proportionate and correlated to the level of risk. Clearly, the rules will be lightened for uses with a low level of risk.
This balance should thus apply to stable corners. In the Commission’s view, stablecoin should in particular be distinguished overall from another cryptocurrency created by small startups or FinTechs.
If they have a global reach, stablecoins are likely to raise additional challenges in terms of financial stability and monetary policy. In these cases, because of their potentially systemic role, our rules will be stricter,” said the Vice President.