- The European Union will complete new “historic” legislation on Bitcoin and cryptocurrencies this autumn.
- Under the new regulations, Bitcoin and other cryptocurrencies will be classified as financial instruments throughout Europe.
A report by the Cyprus Mail reveals that a new legislation on Bitcoin and other cryptocurrencies could be introduced in Europe. Ready for this autumn, the legislation will seek to give legal clarity to activities related to crypto trading. In addition, the new legislation aims to encourage innovation in the crypto and blockchains sector.
The European Union has been working to create a new regulatory and legal framework on cryptocurrencies for at least a year. In that sense, the European Commission opened a consultation in December 2019 in which it publicly asked about comments on crypto regulation. The consultation was answered by private companies as important as PayPal and Google. After the consultation was closed, the Executive Vice President of the European Commission, Valdis Dombrovskis, stated:
Lack of legal certainty is often cited as the main barrier to developing a sound crypto-asset market in the EU. This is a good chance for Europe to strengthen its international standing and to become a global standard-setter, with European companies leading new technologies for digital finance.
Bitcoin and cryptocurrencies are to be classified as financial instruments
According to the report, the president of the Brussels-based Blockchain Federation, Bruno Schneider-Le Saout, called the new legislation “historic”. The president of the Blockchain Federation further said the new legislation will support European digital finance for many years to come and added:
The new legislation will provide legal certainty, which is needed both for crypto-assets that are not covered by existing EU financial services legislation and for the application of DLT in financial services and the tokenisation of traditional financial instruments.
Schneider-Le Saout stated that it is crucial that cryptocurrencies will be classified as financial instruments. This would allow this asset class to be included in the European Union’s legal instruments regulating the markets.
Another important element of the crypto ecosystem, the security tokens, will be subject to more stringent scrutiny. Therefore, the new legislation proposes to create areas where this asset class can be studied. These territories are called “sandboxes” and have their predecessors in an experiment currently being conducted by the UK.
Consumers will quickly benefit from the introduction of the new legislation, as Schneider-Le Saout pointed out. The legislation proposes to create a single market in which this asset class will be sold throughout Europe. It is therefore expected that a regulation will be written to “harmonize” the requirements that providers of crypto products and services will have to meet.
When introduced, the new legislation will replace the already existing legal frameworks at national level and will apply to all cryptocurrencies. Among the most important issues, the legislation covers the following: requirements for stablecoin issuers, requirements for cryptocurrency service providers, a definition of crypto assets, the scope, among others. The legislation is expected to be completed by the end of the third quarter of this year.