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What should be done with cryptocurrencies? France has already started to set up a regulatory framework for “cryptoactives”, a term that broadly designates the “tokens” issued by the various blockchains. The French government has thus regulated this sector through the PACTE law of 2019.
But France is not alone in making progress in this area, and Europe is also working on a draft regulation, a preliminary version of which has been posted on the Internet in recent days. The 167-page document details the draft regulation that the European Commission wishes to implement on the subject of cryptoactives. The authors of the text explain that their ambition is both to propose a harmonized framework for the different Member States, to provide sufficient protection for citizens and businesses, and to leave room for experimentation and innovation in terms of blockchains and cryptocurrencies.
In its broad outline, the text is reminiscent of French regulation. Last year, Bruno Lemaire had already indicated that he wanted European regulation to be inspired by the pre-existing framework set by France. The text insists, for example, on the publication of white papers for all token issuers, in order to offer potential customers a description of the tokens, their usefulness, and their operation.
The main difference with the French approach lies in the binding nature of the European regulatory project: these white papers will have to be approved by regulators before issuing new tokens, and issuers and exchanges of crypto actives will have to obey a series of rules aimed at ensuring their good faith and financial stability.
To implement these new rules, the regulation intends to give new powers in this area to the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), which will be responsible for supervising the application of the regulations, either directly for certain players, or in coordination with national authorities for players who would not fall directly under the control of European authorities.
As explained on the Euractiv site, the most significant crypto actives will be placed directly under the aegis of the European financial authorities, which will have new powers of investigation and sanctions on these players.
This text aims to become the cornerstone of European regulation in the field of cryptoactives and to lay down several definitions in law. It will be supplemented by other forthcoming texts, which should in particular redefine the rules applying to cryptoactives acting as financial securities (excluded from the current draft), as well as on issues related to computer security and the fight against money laundering.
The text is for the moment only a draft and modifications may therefore be made before the final version is published, but gives a good indication of the direction taken in terms of European regulation. For Simon Polrot, President of ADAN, a French association of companies working in the cryptocurrencies sector, the text is “a significant step forward”.
Nevertheless, the association points out certain restrictive aspects of the text: “we understand that some provisions of the text are tougher, in order to regulate certain players, but we believe that this could in some cases pose a risk to innovation in this sector”.