The European Commission has published a proposal for a new EU Regulation on crypto-assets. The proposed Regulation is intended to improve legal certainty in the regulatory treatment of crypto-assets, to support the development of crypto-assets, to preserve consumer protection and market integrity in crypto-asset markets and to ensure financial stability. The Commission has simultaneously published a Regulation on a pilot regime for distributed ledger technology. The proposed Regulations follow the Commission's consultation on an EU framework for crypto-assets, which closed in January 2020.
The proposed Regulation is intended to replace Member States' existing frameworks for crypto-assets to the extent that they are not otherwise covered by financial services legislation, and also sets out a specific regime for "stablecoins" (being cryptocurrencies that are pegged to a stable asset such as a fiat currency). The proposed Regulation will apply to crypto-asset services providers and issuers. In order to offer and market crypto-assets (other than stablecoins and e-money tokens) in the EU, issuers must publish a white paper which should be notified to (but need not be approved by) national regulators. National regulators will have the power to suspend or prohibit the offering, or require amendments to the white paper, once it has been published. Certain exemptions from the obligation to produce a white paper are made, including for small offerings of crypto-assets (below €1m within a 12 month period). In order to offer and market stablecoins, issuers must publish a white paper which should be approved by the national regulator (although once again there are exemptions for small-scale stablecoins and stablecoins that are marketed and distributed only to qualified investors). E-money token issuers must produce a white paper, which should be notified to their national regulator. Other key provisions of the proposed Regulation cover the process for regulatory authorization of stablecoin issuers, e-money token issuers and crypto-asset service providers, the obligation for issuers to establish an orderly wind-down procedure and prohibitions on market abuse involving crypto-assets. The proposed Regulation also establishes the European Banking Authority's powers as supervisor of issuers of significant stablecoins and e-money tokens. Stablecoins and e-money tokens will be determined to be "significant" by the EBA on the basis of a variety of factors, including value or market capitalization of the tokens, number and value of transactions in those tokens and significance of the cross-border activities of the issuer of the tokens.
The proposed Regulation forms part of the EU's package of measures on digital finance which are designed to support digital finance innovation while mitigating risks. The Commission has simultaneously published its EU Digital Finance Strategy, setting out its key priorities for the digital transformation of the EU financial sector over the coming years, proposed Regulations on a pilot regime for distributed ledger technology and digital operational resilience, and a Directive making corresponding amendments to certain related pieces of EU financial services legislation.
View the Commission's proposed Regulation.
View details of the EU's Digital Finance Strategy.
View details of the EU's proposed Regulation on a pilot regime for distributed ledger technology.
View details of the Commission's consultation on an EU framework for crypto-assets.
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