A new report released by the European Banking Authority examines the issue of cryptocurrencies from a regulatory and investment protection standpoint and concluded a pan-EU approach for crypto assets could be beneficial for investors by extending their protection against scams and frauds across the continent and member states. It also encourages the adoption of common AML/KYC policies.
European Banks Examine Crypto Rules
A new report authored by the most important European watchdog hints issuance of new cryptocurrency-centric laws on a pan-European level as the next step for aiding investors against cryptocurrency scams, allowing them a higher level of protection. The European Banking Authority has as its main task the establishment of European rules and standards for banking institutions while monitoring compliance.
Despite openly admitting crypto assets are new and marginally used investment options, and they do not constitute funds or even electronic money under certain cases, regulators are worried about the constant and rapid evolution of the space without having an adequate regulatory frameworks to assess them.
In this regard, even if they do not consider crypto assets as a real risk to the financial system, they are examining the possible issuance and enforcing of EU cryptocurrency rules, which could be applied in the same way for all state members. “Crypto-asset-related activity in the EU is regarded as relatively limited, confirming that, at this time, such activities do not appear to give rise to implications for, or risks to, financial stability. The EBA advises the European Commission to carry out a cost/benefit analysis to assess, on a holistic basis, whether EU-level action is appropriate and feasible at this stage to address the issues identified.” the report stated.
Money Laundering Tackled Too
This report is also influenced by the latest Financial Action Task Force having issued a suite of guidelines designed to guide members of the Union to establish common anti-Money Laundering and Know Your Customer policies. Although they regard it as a part of a “holistic approach” at the issue, it is clear those guidelines will be the basis of a financial standard for ID compliance schemas. “The EBA also advises the European Commission to have regard to the latest recommendations and any further standards or guidance issued by the FATF as part of a holistic review of the need, if any, for action at the EU level, and calls on the Commission to take steps where possible to promote consistency in the accounting treatment of crypto-assets,” the report insisted.
However, as a Reuters report stated, finding common ground to establish applicable sets of rules for the entire cryptocurrency industry can be difficult. Even in countries like the US, there is still a debate on whether certain cryptocurrencies are securities or not, so at a multi-country level, such distinctions can be even more troubling.
Despite all this, the European Bank Authority is plugging ahead. “Given the pace and complexity of change, it would be desirable for a technologically neutral and future-proof approach to be adopted in developing any proposals should it be concluded that EU-level action is needed,” the agency noted.
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