European Parliament Adopts New Recommendations about Cryptocurrencies in the EU

On March 14, the Economic and Monetary Affairs Committee adopted its position on new rules on crypto-assets. They aim to boost users’ confidence and support the development of digital services and alternative payment instruments. MEPs agreed on draft rules on supervision, consumer protection and environmental sustainability of crypto-assets, including bitcoins.

Leading Principles

Key provisions agreed by MEPs for those issuing and trading crypto-assets (including  asset-referenced tokens and e-money tokens) cover transparency, disclosure, authorisation and supervision of transactions. Consumers would be better informed about risks, costs and charges. In addition, the legal framework supports market integrity and financial stability by regulating public offers of crypto-assets. The agreed steps include measures against market manipulation and to prevent money laundering, terrorist financing and other criminal activities.

Supervision

It is planned the European Securities and Markets Authority (ESMA) will supervise the issuance of asset-referenced tokens, whereas the European Banking Authority (EBA) will be in charge of supervising electronic money tokens.

Environmental Risks

To reduce the high carbon footprint of crypto-currencies, particularly of the mechanisms used to validate transactions, MEPs suggest a legislative proposal shall be elaborated to categorise crypto-asset mining activities as those that contribute substantially to climate change by January 1, 2025.

Background

Crypto-assets are currently out of the scope of EU legislation. This creates risks for consumer protection and financial stability, and could lead to market manipulation and financial crime. The draft proposal differentiates between crypto assets in general, asset referenced tokens, also called “stable coins”, and e-money tokens primarily used for payments.

Source:

ECON’s press release

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