The European Central Bank (ECB) is working to harmonize the regulatory framework governing cryptographic activities and services in the EU. The regulator noted that several regulatory initiatives at European and international level are being finalized.
ECB Regulatory Plan for Cryptocurrencies
The European Central Bank (ECB) outlined its plan on Wednesday to harmonize the regulatory framework governing crypto businesses and services in the EU. The regulator explained that banks are increasingly considering whether to offer cryptographic products and services and it is up to the ECB to “make sure they do so in a secure and robust way.”
The ECB said it worked closely with national regulators “to ensure a consistent approach and high standards across countries”, elaborating:
There is currently no harmonized regulatory framework governing cryptocurrency activities and services in the EU.
“This will change with the finalization of several regulatory initiatives a [the] European and international level “, the ECB detailed, citing the proposal of cryptocurrency markets (MiCA) to regulate the cryptocurrency sector in the EU. At the international level, the Basel Committee for Banking Supervision plans to issue its rules on prudential treatment of cryptocurrency exposures for banks.
The ECB stressed that regulatory frameworks for cryptocurrencies “diverge quite widely” between EU countries. For example, some crypto businesses are subject to a banking license requirement in Germany. Several banks have applied for permission to conduct crypto assets in the European country, the ECB said, adding:
It is in this context that the ECB is taking steps to harmonize the assessment of license applications.
The ECB also stressed that it is working to assess the risks posed by cryptocurrencies, stating:
Cryptocurrencies put the spotlight on certain types of risk, starting with operational and cyber risks, and the ECB is also working to assess them.
Furthermore, “internal governance arrangements and processes must take into account the AML / CFT of cryptocurrencies [anti-money laundering/combating the financing of terrorism] risk profile of the institute “, underlined the European regulator.
ECB President Christine Lagarde said in June that “crypto assets and decentralized finance (defi) have the potential to pose real risks to financial stability.” She added: “This would be especially true if the rapid growth of cryptocurrency markets and services continued … and the interconnection with both the traditional financial sector and the wider economy intensified.”
What do you think of the ECB’s work to create a harmonized regulatory framework for cryptocurrencies? Let us know in the comments section below.
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