The Executive Vice President of the European Union, Valdis Dombrovskis, presented a speech in which he urges Europe to become a pioneer in implementing strict regulations towards cryptocurrencies in the region.
During the closing conference of Digital Finance Outreach 2020, the Executive Vice President of the European Union Valdis Dombrovskis issued a speech regarding digital finance, the FinTech industry, cryptoassets and stablecoins. During his speech, Dombrovskis expressed his point of view that Europe can and should take advantage of the current crisis, and the accelerated process of adoption of digital finance that it has caused, to become a pioneer and global reference in the creation of standards and regulations around this type of finance. Dombrovskis expressed that:
“This is a good opportunity for Europe to strengthen its international position and become a global standards setter, with European companies leading new technologies for digital finance.”
Mentioning that the current position that Europe occupies can be used to the maximum to position itself with a good regulatory base for FinTech companies and cryptocurrencies, .
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New regulatory regime for digital assets and cryptocurrencies
In mention of cryptocurrencies and technology blockchain, Dombrovskis highlighted that this would be his first “test case”, mentioning that these technologies have the potential to provide multiple advantages and benefits to users, but that the lack of legal certainty is presented as the main barrier that prevents adoption and implementation. massive number of these systems on the current market.
Dombrovskis pointed out that digital assets, cryptocurrencies and blockchain can allow for much cheaper and less bureaucratic payments, making them an ideal source of financing for small businesses and other market participants. Likewise, he pointed out that the current lack of legal certainty can be positively changed by them, since Europe has the potential and the conditions to “lead the path of regulation.”
According to the European Union's plans, Dombrovskis argued that for this or next year they will be able to present their regulatory proposal, which will cover all those crypto assets that are not under any current regulation. For example, to date, the security tokens are under European legislation, but cryptocurrencies themselves and especially stablecoins (stablecoins) remain outside the legal framework of these legislations.
In this sense, Dombrovskis argues that:
“Some crypto assets fall under current EU regulations. But many other assets do not and present problems regarding consumer protection, market integrity and a level playing field for competition. “This exposes consumers to substantial risks and fragmented national regulations in a market that is unique.”.
Likewise, Dombrovskis pointed out that the regulations covering certain cryptoassets will also be adjusted to ensure that they remain in line with the purposes of the European Union.
Regulations regarding blockchain technology
For his part, referring specifically to blockchain technology, Dombrovskis pointed out that regulatory measures will be implemented that allow experimentation with this technology, but that they will also be under a strict regulatory framework and well-structured supervision.
“As distributed ledger technology is constantly evolving, we will propose a pilot scheme to give some regulatory flexibility for experimentation, but well framed and under close supervision.”
According to Dombrovskis' speech, the European Union's approach is to simplify the level of risk related to this type of asset; in addition to establishing regulations that help both investors and users understand all the associated risks. Likewise, Dombrovskis points out that there will be “clearer rules for less risky projects.”
Regulations regarding stablecoins
Referring to stablecoins, Dombrovskis argued in the speech that the regulations will be directed at global stablecoins, and those created by local companies and FinTech. In this sense, the vice president of the European Union highlighted that these currencies are where their strictest rules and regulations will be directed, considering that global stablecoins can generate other types of challenges to guarantee the financial stability and monetary policy of the region.
Although Dombrovskis did not provide any details about the new regulations or what exactly a global stablecoin encompasses, the vice president said the European Union emphasizes its efforts particularly in this type of asset.
“In these cases, because of their potentially systemic role, our rules will be stronger.”
Finally, the vice president of the European Union pointed out that the new regulations to be implemented will be necessary to increase the resilience and confidence of users and potential investors in the new digital systems.
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