The European Central Bank (ECB) is working to harmonize the regulatory framework governing crypto activities and services in the EU. The regulator noted that several regulatory initiatives at the European and international levels are being finalized.
ECB’s Crypto Asset Regulation Plan
The European Central Bank (ECB) on Wednesday outlined its plans to harmonize the regulatory framework governing crypto activities and services in the European Union. The regulator explained that banks are increasingly considering whether to offer crypto products and services, and the role of the ECB is to “ensure that they do so safely and securely.”
The ECB said it worked closely with national regulators “to ensure a consistent approach and high standards across countries”, elaborating:
Currently, the EU does not have a unified regulatory framework to govern crypto-asset activities and services.
“This will change as several regulatory initiatives are finalized [the] European and international level,” the ECB detailed the Markets in Crypto Assets (MiCA) proposal to regulate the crypto industry in the EU. Internationally, the Basel Committee on Banking Supervision plans to publish its rules for the prudential treatment of banks’ cryptocurrency exposures.
The ECB noted that the crypto regulatory framework “varies significantly” between EU countries. For example, certain crypto activities are subject to German banking license requirements. Several banks have requested authorization to carry out crypto activities in the European country, the ECB said, adding:
It is in this context that the ECB is taking steps to harmonize the assessment of licensing applications.
The ECB also highlighted that it is working to assess the risks posed by crypto-assets, stating:
Crypto assets focus on certain types of risks, starting with operational and cyber risks, which the ECB is also working to assess.
Additionally, “Internal governance arrangements and processes need to consider cryptoasset AML/CFT [anti-money laundering/combating the financing of terrorism] The agency’s risk profile,” the European regulator stressed.
ECB President Christine Lagarde said in June that “cryptoassets and decentralized finance (defi) have the potential to pose real risks to financial stability.” She added: “If the cryptoasset market and services continue to grow rapidly…and this is particularly the case with enhanced interconnections with the traditional financial sector and the wider economy.”
What do you think of the ECB’s commitment to creating a unified regulatory framework for crypto assets? Let us know in the comments section below.
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