The European Banking Authority (EBA) is calling for a common approach in Cryptocurrency regulation. The EBA decries the fact that most European countries are crafting policies that are specific to their countries. This is creating confusion as the new regulations are becoming too diverse and going against the spirit of a seamlessly connected European Economic Union.
Therefore, it is highly likely that a single regulatory framework for Crypto assets in the region would spur growth in the Blockchain and Cryptocurrency industry. This is due to the fact that these DLT-based companies will be able to direct expand to all the 27 EU countries and also to the UK without having to reform and customize their features for a specific law.
Cryptocurrencies fall Outside EU Financial Law
The problem is emanating from the existing European Union financial legislation that fails to consider Digital assets as an emerging version of financial products. The existing law, hence, is silence on the contribution of BTC, ETC, XRP, BCH, LTC, DASH, ADA, etc. in the financial environment. According to the EBA, a change of perception about Digital assets which includes the full recognition of Tokens in the changing financial landscape is a step in the right direction in the quest for harmonious policies.
Technically, a unified EU stance on Cryptos would be critical in monitoring changes in the industry and coming up with policies that eliminate any negative developments while nurturing positive aspects.
The Recommendations Are A Result Of An Year Long Study
The European Banking Authority reveals that the recommendation is as a result of a year-long investigation that delved in exploring Cryptocurrencies performance in the EU. The findings note that there is a need for a “level playing field” to ensure that the role of Digital Tokens in the EU economy converges to a single effect.
One of the examples that the recommendation is inferring is the case of Germany and the UK. In the latter case, there are discussions of controlling Crypto derivatives while this asset class is already prohibited in Germany. In both countries, the policy is being decided on the basis that Crypto derivatives speculate Token prices which can have the effect Crypto markets prices putting less-informed investors at risk of volatilities. However, the two countries are arriving at different conclusions where one is prohibiting this asset class while the other is still not sure what to do.
Avoiding Emergence Of Crypto Havens
The EBA notes that the lack of a uniform policy in the region will lead to an emergence of Crypto havens such as Malta and Gibraltar. This is because some countries will seize the opportunity to benefit from the lack of a common approach by creating less stringent environments. This would lead to unequal development and contribute to economic disparities in the region.
Adam Farkas, the EBA executive director, is appealing to the European Commission to evaluate opportunities and risks in Cryptocurrencies to create policies that all member states will be required to abide with.