The European Commission (EC) has recognized the need to give way to the crypto asset market but in a controlled manner, hence, the executive arm of the European Union announced that it would be launching a new rule later this year to build a “sound” crypto-asset market in the EU.
The serving Vice-President for the Euro and Social Dialogue at the European Commission, Valdis Dombrovskis, made the statement Tuesday, June 23, during the Digital Finance Outreach conference, in Brussel.
Recognizing the benefits of cryptocurrency in the finance market, Dombrovskis stated that digitalization is the future of finance, and Europe must go digital to stay atop.
Effort is ongoing to tap the innovative potentials of digital finance in the best way, he said, adding that giving digital finance mainstream adoption will benefit the European economy through job creation, among other things, especially due to the demeaning effect caused by COVID-19.
However, Dombrovskis said there is a need for strong supervision and regulation to make sure the finance industry remains in its normal state and people continue to have trust in finance.
Also the financial services commissioner, Dombrovskis noted that the plans include stablecoins like Facebook’s Libra, EURACTIV has said.
To ensure the development of a sound crypto-asset market in the EU, the commission will be launching a new rule that will make a balance between protecting consumers and making way for digital innovation.
Dombrovskis proclaimed that the regulatory gap has been a major hindrance to the crypto market in the EU, however, he believes that Europe will take the lead in ensuring regulatory certainty for the crypto-asset market.
The existing rule in Europe covers some crypto-asset, but the commission believes that there is a need for recodification to create a better landscape, thus, a ‘sandbox’ will be created by the commission to experiment with a framework that will be closely supervised.
Dombrovskis expressed that the commission aims at making sure risks are averted, and users, including investors, have a clear understanding of digital currencies not to fall prey.
Dombrovskis explained that under the new rule, global currency like Facebook’s Libra currency would have to stricter rules to be granted approval since they are more likely to pose higher risk and challenges to financial stability and monetary policy.
Crypto rule will also be inaugurated in the new digital financial strategy to help avert barriers crypto/blockchain-based startups face and also harness the potential of digitalization.
While it is envisaged that the new strategy will help enhance the ‘open finance’ system, Dombrovskis said the European Commission will focus more on cybersecurity by strengthening its rules.