Europe plans to create a regulatory framework for the circulation of cryptoassets, which will include stricter requirements for global stablecoins.
In September 2020, Europe announced the legal framework for the crypto industry to speed up cross-border payments and make them cheaper through blockchain technology and crypto assets. According to the commission’s estimates, the pandemic has highlighted the relevance of wire transfers.
Simultaneously with Europe, Switzerland amended its legislation. The changes helped open the door not only to decentralized finance, but also to the creation of digital stocks of companies and a range of other tradable assets. The law is expected to enter into force in early 2021. “Starting next year, we will have one of the most advanced regulatory frameworks in the world”, said the President of the Swiss Blockchain Federation.
Most countries with highly developed economies recognize a new reality. They are integrating blockchain technologies and the cryptocurrency market into the economy and developing a regulatory framework for their turnover.
Systemic laws have not been adopted, but many states have developed their own rules of the game. Which, we note, are quite different.
However, many regulators still choose to wait and see what others do. The eyes of all countries are riveted on the European Union and its individual approach to the regulation of cryptoassets.
Regulation of crypto assets in Europe
In September 2020, a preliminary version of the draft law on the cryptocurrency asset market for Europe hit the media. By 2024, the EU must create a comprehensive framework to enable distributed ledger technology (DLT) and cryptoassets in the financial sector. The law must also take risks into account.
Although back in 2016, the European Parliament didn’t see the need to regulate cryptocurrency. Then the Committee on Economic and Monetary Affairs issued a report, proposing to limit itself to the creation of a pan-European operational working group on digital money.
Cryptocurrencies attracted by the possibility of cashless money transfer to anywhere in the world where there is Internet. Allowing you to do it quickly and at minimal cost. And the phenomenal rise in the value of cryptocurrencies a year ago began to attract people with speculative interests.
Cryptocurrencies are outside the control of government authorities and banks. They represent an asset outside the existing financial system.
In times of hyperinflation many began to think that storing value in cryptocurrency could be much more reliable.
Against this background, all countries concerned with the regulation of these assets, that is, the creation of a regulatory framework. The European Union is ahead of other countries and associations in this matter.
US regulated crypto industry
The United States is also famous for its progressive approach to the introduction of financial instruments. But regulators have different attitudes towards cryptocurrency.
– FinCEN back in 2013 announced its position – cryptocurrencies should be equated to ordinary money and similarly regulated. All crypto exchanges and exchangers required to register as financial service providers.
– The SEC classifies cryptocurrency as an asset. This is much closer in status to stocks and other securities than to traditional money. Therefore, at the legislative level, regulation carried out in the same way as other stock assets.
– The CFTC classifies cryptocurrencies as commodities. The organization is loyal to virtual money.
– The US Treasury continues to speak negatively about digital currencies, considering them a tool for money laundering by criminals.
A European regulatory proposal called MiCA will set a precedent for other countries to learn and either follow or part with a competitive edge. This is an ambitious regulatory project. The MiCA designed around 4 main objectives: legal certainty, support for innovation, consumer and investor protection, and market integrity. Failure to comply with these principles will have consequences for the entire Europe.