The European Union (EU) proposes new legislation to regulate the financial markets of cryptocurrencies such as Bitcoin and stablecoins such as Facebook's Libra project. 

The rise and development of new technologies is leading to the creation of new commercial and financial markets. In Europe, there are many companies that adopt developing technologies every day, such as blockchain, to offer better quality of services and attention to its clients. Likewise, every day, more technology companies are joining in to offer digital financial services. 

Technological adoption encourages the inclusion of citizens in the economic system, while promoting its growth and development. Thanks to this boom, the European Union (EU) announced recently a series of strategies that will boost digital finance and new commercial markets, as well as regulate this sector to ensure its transparency and reliability, providing protection and security to investors and users. 

Today, digital finance is helping citizens and businesses around the world to deal with the unprecedented situation caused by the COVID-19 pandemic. A pandemic that is forcing us to radically change the way we see the world, and especially the financial system. The current crisis is driving economies to adopt a new financial model based on digital finance, and in Europe, the EU considers that new technologies are key to the transformation, relaunch and modernization of the economy in all its areas and sectors.

The new strategies proposed by the EU, considered some of the most complete in the world, seek to promote digital finance, promoting the level of investment in these spaces and mitigating the risks associated with new finance, to protect investors in this sector. in constant growth and development. 

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Proactive approach to digital finance

Among the fundamental principles that the European Union maintains in its regulatory proposal, the one of guaranteeing digital innovation stands out, as an element that awakens and encourages the interest of investors, consumers and users in the new digital markets. 

With this vision, the European Commission maintains a proactive approach, presenting legislative initiatives on the cryptocurrencies, and digital assets, to ensure the participation of new finances within the digital era. Likewise, the European Commission seeks to implement a new regulatory regime that allows and encourages the creation of a European financial data space, which has the potential to promote technological innovation based on the European data strategy. Implementing a new financial policy, based on new technologies and crypto assets, will lead to the creation of innovative products for users and consumers, the entity assures. 

In the same way, through a new regulatory regime, the European Union will be able to efficiently address the challenges and risks associated with digital transformation. In this regard, the vice president of the European Commission, Valdis Dombrovskis, assured that it is necessary to adopt digital transformation in a proactive way, while mitigating any potential risks associated with this transformation. 

“We must proactively embrace digital transformation, while mitigating any potential risks. An innovative digital single market for finance will benefit Europeans and will be key to Europe's economic recovery, offering better financial products for consumers and opening new financing channels for businesses.

With the new policies, the European Union seeks to promote digital operational resilience, data protection and prudential and efficient supervision, guaranteeing consumer protection and equal conditions between existing financial entities in the sector and new participants that are emerging. integrate into the market.

Regulation on cryptocurrencies and stablecoins

Regarding cryptocurrencies, stablecoins and other digital assets, the European Union ensures that an important part of its digital financing strategy is to guarantee that legislation is favorable to the crypto asset market. The entity wants to take advantage of all the potential that digital assets offer, which is why it aims to implement a regulatory regime that encourages the development of cryptocurrencies and companies that use blockchain technology to provide financial services.

“We also want to ensure that Europe can take full advantage of the potential offered by cryptoassets, while mitigating risks to consumer protection, market integrity, financial stability, monetary policy transmission and monetary sovereignty.”

According to the new regulatory framework, crypto asset companies must have a physical headquarters within EU member countries, and be subject to prior authorization from a competent national authority before starting their activities. Additionally, these companies will be subject to capital requirements, governance regulations, and an obligation to segregate their clients' assets from their own. As cryptocurrency and digital asset service providers, these companies must be subject to IT requirements to avoid the risks of hacks, theft and other cyber attacks.

As for the Bitcoin and the project Pound of Facebook, the European Commission assures that crypto assets have the capacity to take many forms. Bitcoin, for example, is a digital currency that is not backed by anything, while Libra does have the support of its creators. In this sense, the EU considers that different regulatory regimes should be applied depending on the type of functions and the risks represented by each of the crypto assets. 

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