EU Regulators Warn Again on Crypto Investment Risks - CoinDesk
She joined a number of regulators from across the world in calling for implementing global rules for cryptocurrencies. This has to be applied and agreed upon For more coverage from the Reuters Next conference please click here or www. To watch Reuters Next live, visit here. Future of Money Updated. By Reuters Staff 2 Min Read.
New Crypto Rules in the European Union – Gateway for Mass Adoption, or Excessive Regulation?
Today, however, the digital asset regulatory landscape remains polymorphous and ambiguous as ever. Some countries have embraced transformative technologies with top-down initiatives, while others have remained to simple investor protection warnings. The European Blockchain Observatory and Forum report on the state of blockchain in the EU introduces a framework for ranking countries on a three-stage regulatory maturity curve, based on their specific characteristics.
Stage I describes countries where blockchain and digital assets regulation is generally absent, save perhaps for the occasional investor warnings issued by relevant authorities. Countries falling under Stage II have shown significant sings of involvement in the digital assets field. State-sponsored studies and pilots are also commonplace for countries in Stage II, as is an established framework for the characteristics and the taxation of digital assets.
Lastly, countries under Stage III have adopted specific legislation that pertains to digital assets and have voted, published, or are actively developing a national strategy to exploit them. The UK, France, Cyprus, Malta, Estonia, and Switzerland have set a pan-European example with their embracive and innovation-driven approaches, fall under either stage II or III on the framework and have generally adopted more nuanced approaches indicative of industry trends that are worth outlining.
However, the establishment of Cryptoassets taskforce in is not when it all started.
In fact, the UK was one of the first countries to realize the potential of blockchain and digital assets in Europe, as evident by a relevant report by HM Treasury studying the potential benefits, risks and barriers towards their adoption. The report went as far as suggesting specific regulatory actions. A short year later, the country launched its Digital strategy , which focused on the development of businesses in the digital field and included companies active in the field of digital assets and blockchain.
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Virtual currency taxation is largely governed under a policy paper issued by HM Revenue and Customs. France is another country that acknowledged the potential of blockchain and digital assets early. Following a comprehensive report issued by the French Central Bank on Bitcoin, the French Financial Market Authority AMF and Prudential Supervisory Authority warned investors of the potential pitfalls of digital assets that stemmed from their unregulated nature. A ordinance provided the first definition of blockchain in French law and allowed for the on-chain registering of cash vouchers.
France also adopted a specific ordinance to become the first country to authorise the registration and transfer of unlisted securities using blockchain technology.
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With low taxation and openness to innovation, the country emerged as an epicentre of blockchain activity. In , the CySEC announced an innovation hub as part of its plan to foster business activity and an informed regulatory landscape for transformative technologies, including blockchain and digital assets.
The bill came into effect later the same year. In the development of their national blockchain and digital assets strategy, Cyprus opted for co-creation, involving the CySEC, Central Bank of Cyprus, relevant ministries, the Parliament at large, and important stakeholders from the private sector, such as the Cyprus bar association and the Cyprus Chartered Accountants Association. With a national strategy already in place, Cyprus is now closely monitoring and participating in the pan-European discussion on digital assets and is ready to enact necessary changes to align with European guidelines on their regulation, taxation and general treatment.
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In the same year, the country had introduced three bills, outlining its comprehensive regulatory framework and establishing its national strategy. More specifically, the laws approved by the Maltese parliament were the Virtual Financial Assets Act VFAA , with an objective to regulate the field of ICOs, digital assets, virtual currencies and related services, the Innovative Technological Arrangements and Services Act , which aimed to set the framework for the registration of technology service providers in the blockchain space and the certification of smart contracts, and the Malta Digital Innovation Authority Act , which established the MDIA, with a role to certify blockchain deployments and smart contracts.
The MFSA has introduced a test to separate digital assets in four distinct categories based on their characteristics. Those categories are electronic money, financial instruments, virtual tokens and virtual financial assets. Taxation applies depending on which category an asset falls under.