The European Commission (EC) approved on Thursday September 24, a digital finance package, including a retail payments plan, digital finance strategy and legislative proposals on cryptocurrency and digital resilience, for a booming European Union (EU) financial sector that gives customers access to state-of-the-art financial goods and services.
These newly introduced measures could be vital in backing up the EU's economic salvage since it will help unbolt fresh means of channeling funds and other crucial aid to firms and dealings in the region.
The EC is working around the clock to give more above-board clarity plus cast-iron certainty for the digital currency landscape within the 27 member nations of the EU. This has been the first time to see the Commission suggesting new regulation on cryptocurrencies.
The authority is paying special regard to stablecoin, a cryptoasset created to abate the instability of the price of the coin, in relation to some particular "stable" asset or a couple of assets. Stablecoins can be pegged to a cryptoasset, traditional currency, or to exchange-traded commodities (ETFs) like valuable products including precious and industry metals.
The fresh proposals are targeting bringing in stricter regulations and rations for stablecoin creators with reference to capital, rights of venture capitalists, as well as supervision. The issuance agency/company of stablecoins will be required to be authorized by a national competent agency in case the sum of stablecoins is more than €5 million. However, the requirements that will be enacted on cryptocurrency issuers and service providers, must be proportional to the risks caused by the services offered.
If the package is finally considered by the EU Parliament and the EU Council, the digital friendly and safer guidelines created by the Commission for both cryptoasset issuers, digital currency start-ups and users will play a bigger part in heightening technological innovations in the EU’s fintech industry.
So far, apart from the United States and China, European countries look to be leading other nations from various continents as far as cryptocurrency and distributed ledger technology is concerned. Europe is trialing central bank digital currency (CBDC) with several countries including Lithuania, Sweden at the forefront. Switzerland is regulating the banking licenses, cryptocurrency and capital market using the rules for stablecoin created by Swiss Financial Market Supervisory Authority.
In an effort to combat illicit activities associated with cryptoasset like terrorism funding, drug trading, money laundering, etc., the EU drafted the 5th Anti-Money Laundering Directive in 2018, and these measures have helped to reduce such activities in the region.