In a bid to protect European investors from crypto-related scam and preserve the interest of its financial market, the European Union is planning to create sustainable regulatory policies for digital currencies.
As a renowned home for booming fintech startups, the European Union’s executive body revealed Thursday that it had proposed a “one of its kind” regulation to govern digital currencies beyond areas not covered by traditional laws.
Commenting on the best approach toward a sustainable crypto adoption in Europe, Executive Vise President of the European Commission, Valdis Dombrovskis said: “We should embrace the digital transformation proactively while mitigating any potential risks.”
Per the proposal, the regulation’s primary areas include data protection and supervision, addressing risks and issues associated with digital evolution, and ultimately providing a European financial data space to create data strategy and innovations.
Furthermore, the new regulation seeks to ensure that Europe-based crypto firms with trading platform solutions will require a physical location presence in the continent rather than a virtual internet existence.
According to the Commission, a physical location presence will make crypto forms submit to a capital base requirement and, in turn, will be for the benefit of Europe’s financial market. To this end, Valdis Dombrovskis commented;
An innovative digital single market for finance will benefit Europeans and will be key to Europe’s economic recovery by offering better financial products for consumers and opening up new funding channels for companies.
The commission further gives attention to Facebook’s Libra, otherwise referred to as a stablecoin, which can pose a threat to European financial stability. Therefore, it proposes that the European Banking Authority will dully supervise the stable virtual coin.
The proposed regulation remains subject for approval into law until 2024 before it can swing into action.
Lately, individual European countries have been stepping up with stricter crypto regulations to salvage the financial markets. In August, the Irish government published a regulatory bill to include crypto exchanges and wallet providers as designated bodies to checkmate trading activities within the crypto space.
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