It has been doing the rounds that the European Commission is planning to initiate a forthcoming framework for cryptocurrencies and stablecoins. The same can be seen on the organizations’ website as discussions are centered around it as well as the original website and documents.
The newly proposed and prospective framework will also include divergent aspects of digital commerce with a particular set of focus being placed on crypto assets which are cryptocurrency, blockchain companies, or DLT market infrastructures. It has also made it very clear in its documents what it considered as crypto assets and has provided the necessary rules for the digital finance industry.
The commission believes that it wants to build on existing rules. It has also been noted also that some of the crypto assets already come under existing laws, but these laws antedate both crypto and blockchain as it is known today. The new proposal will suggest a regime for market infrastructures that are responsible for the efficient handling of cryptocurrency transactions.
There is an overall set of benefits provided here not just to the overall framework but also consumers. The users will be protected against unregulated crypto markets because it will look forward to regulating the crypto custody services, custodial wallet providers, and also exchanges. It has in its body of work also the much-needed regulation for stablecoin which was also requested by several nations in the European Union earlier this month.
The new proposed framework will take over all the shortcomings of the previous ones and intends to cover all digital assets and services. Earlier the focus was more on publicly traded cryptocurrencies but it will be on utility tokens, asset-backed tokens, e-money tokens, and stable coins. It also set precedence for DLT market infrastructures and companies that are in the business of handling assets on a decentralized ledger.
The novel point about the newly proposed framework is that it will not treat all the assets as financial instruments because every asset has different functions and risks. The major goal hence is to provide legal confidence around these assets within the perimeters of the European Union.
Now, as per the new framework of policies, the regulations will also mean that those companies which are looking to provide digital financial services will need to have a physical appearance in the European Union if it intends to operate. The companies also will need to rigorously follow capital requirements and new governance standards that are set. They will apparently be required to separate client assets from their own. The rules will not be to discourage the companies but they will also offer a set of benefits. With an EU passport, the registered financial services can operate across the entire EU.
The proposal is not still finalized and can be changed. It also will go through the protocols of bringing approved by the European parliament and council before it is signed along the dotted lines.