Crypto Mastermind summary:

  • It is expected that new „historical“ EU laws for the regulation of crypto-assets and their definition as financial instruments will come into force in autumn 2020.

  • A stricter examination of security tokens representing equity investments in companies is planned.

  • An EU single market is planned to „harmonize“ the requirements for providers of crypto-assets and to establish unified authorisation procedures.

Already in 2019, the EU Commission discussed a regulation of cryptocurrencies and blockchain platforms in a consultation with experts from all over Europe. Large platforms such as Google and PayPal were also involved in the debate. According to a report in the newspaper Cyprus-Mail, the Commission will complete its work on digital finance in autumn 2020. This will be followed by a clear definition of cryptocurrencies in European law. In addition, innovations in the blockchain sector are to be supported.

New classification of crypto-assets as financial instruments

The president of the Blockchain Federation in Brussels, Bruno Schneider-Le Saout, said that the classification of cryptocurrencies as financial instruments was important. This could classify crypto-assets within the comprehensive framework of European and national legal instruments. President Schneider-Le Saout said he is confident, that the newly adopted legislation would support digital financing throughout the EU for many years. He said:

„We expect this legislation to be historic for Europe, these laws will support digital finance across the EU for many years to come. … The new legislation will provide legal certainty, which is needed both for crypto-assets that are not covered by existing EU financial services legislation and for the application of DLT in financial services and the tokenisation of traditional financial instruments.“

Another important issue would be a stricter check of the security tokens. This refers to crypto-assets, that act in some way as an equity stake in a company. For this purpose, a so-called „sandbox“ is planned. This is a legal test site on which the activity of the tokens on the blockchain is to be examined.

The new rules will soon apply unified throughout the EU

The new drafts would replace the existing framework for crypto-assets in the EU area. Essentially, these are:
– Scope and definition of cryptocurrencies
– Requirements for issuers of Stablecoins
– Requirements for providers of crypto-assets
– Specific rules to ensure market integrity
– Monitoring of issuers and permission of the competent national authorities

The requirements for providers of crypto-assets and -services are to be „harmonized“. For that, it’s planned to implement a single market for the assets so they can be sold across all EU-borders. The procedures for the necessary approvals for providers are also to be standardised.

In fact, that no further delays are caused by the Corona crisis, the adoption of the new draft legislation is planned for the third quarter of 2020. An agreement in the EU area regarding the handling of crypto-assets will in all probability bring more clarity to the legal aspect of the crypto-sector.

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