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- FECIF report highlights most important points about new crypto regulation towards Bitcoin (BTC) and other cryptos.
- Proposal for new regulation legislation will create a pilot program to study use of blockchain technology in the EU.
Research firm D-Core has published a report by the European Federation of Financial Advisers and Financial Intermediaries (FECIF) on the adoption of the “Digital Financial Package”. Adopted by the European Union at the end of September, the package introduces an unprecedented set of regulations for Bitcoin, Ethereum, stablecoins and digital assets in general. The FECIF breaks down point by point the most important aspects and implications for service providers related to these assets, consumers and the future of the industry in Europe.
The new regulatory framework is divided into the following parts: Digital Finance Package, Digital Finance Strategy, Retail Payments Strategy, Legislative proposal on crypto assets and Legislative proposal on operational resilience. As reported by CNF at the time of publication of the new regulatory framework, its objective is to give a boost to “competitiveness and innovation” in European countries, to provide new financial and payment instruments to consumers and to reduce the risk associated with this asset class.
Key points on new regulation towards Bitcoin and stablecoins in Europe
According to the FECIF, the Digital Finance Strategy in Europe will reduce “fragmentation in the digital single market”. European consumers and industries will therefore be able to access the financial products it regulates with “rules that are fit” for the digital age. Within the region, the application of blockchain technology will be allowed following the institution’s standards in terms of privacy and data protection. Banks and other financial service providers, adds FECIF, will have the same rules and face the same risk.
The retail payments strategy introduced will have a “modern” approach aimed at increasing the speed of transactions made in the European Union and reducing their costs. Its main strength is to encourage ease of payment for European consumers through the creation of an integrated retail payment system throughout the region. Local payment solutions, clarifies FECIF, will be promoted, but a company like Ripple could benefit from the new regulation.
One of the most important aspects of the proposed legislation is the ‘Regulation on Markets in Crypto Assets’ (MiCA). Designed to provide legal clarity and certainty to digital asset issuers and service providers, MiCA will allow “authorised operators” in an European country to offer their services throughout the region. It also introduces new safeguards such as capital requirements, asset safekeeping, enforcement procedures, among others. On the other hand, stablecoins issuers will have more requirements. For example, they will have to publish a Whitepaper and be more transparent with their economic information.
The institution also published details on the pilot program with a “sandbox” approach that will be applied in specific areas of the European Union. In this way, regulations will be suspended and regulators will be able to gain experience on how the referred assets and the distributed ledger technology are used in market infrastructures. Thus, regulators will gain “real world” experience. Finally, the new regulation requires all related service providers, firms and financial institutions to demonstrate their ability to deal with digital threats.