Crypto regulation - EU takes on a pioneering role worldwide

According to the digital association Bitkom, cryptocurrencies such as Bitcoin could gain significant momentum in Europe if the recently published draft EU regulation is implemented. Among other things, uniform rules for issuers, custodians and trading platforms are to be created for crypto assets.

For so-called significant stablecoins such as Libra, on the other hand, the requirements are likely to be much stricter. Among other things, supervision is to be transferred from the national supervisory authorities to the European level (EBA) for this purpose. "The EU is harmonizing the existing regulatory patchwork for cryptocurrencies and can thus take on a global pioneering role," says Patrick Hansen, Head of Blockchain at Bitkom.

"Given the fast pace at which the crypto market is developing, the task now must be to implement this regulatory proposal into applicable law as quickly as possible." The draft regulation also proposes to allow a so-called pilot regime for certain infrastructures using distributed ledger technology. This could allow regulatory exemptions for crypto trading venues and custodians of security tokens.

And for crypto assets that already qualify as financial instruments under EU law, there are to be legal adjustments as well as clarifications to provide more legal certainty.

"This legal certainty, combined with a single EU internal market where national licenses are valid and transferable across the EU, could attract many crypto companies to Europe. The EU can set global standards with its regulation and build a global locational advantage for itself"says Hansen.

"What will be important here, however, is that when specific measures are taken, regulatory requirements are not set so high that a competitive disadvantage is created or innovative startups are excluded."