The European Banking Authority (EBA), has announced for new Pan-EU rules on crypto assets. The EBA published a report on January 09 on the outcome of the applicability and suitability of European Union (EU) law to crypto-assets, in a bid to strengthen consumer protection.
The report further stated that crypto-asset activities might also give rise to other risks, including money laundering. In the wake of these issues, the EBA recommends that the European Commission carry out further analysis to determine the appropriate EU-level response.
The EBA reported on its official website that:
“Crypto-assets are a type of private financial asset that depends primarily on cryptography and distributed ledger technology as part of their perceived or inherent value. A wide range of crypto-assets exist, including payment/exchange tokens (for example, so-called virtual currencies (VCs)), investment tokens and tokens to access a good or service (so-called ‘utility’ tokens).”
Adam Farkas, the EBA’s Executive Director, stated in a report that “The EBA’s warnings to consumers and institutions on virtual currencies remain valid. The EBA calls on the European Commission to assess whether regulatory action is needed to achieve a common EU approach to crypto-assets. The EBA continues to monitor market developments from a prudential and consumer perspective.”
Identifying the rapid progression in the use of crypto-assets, the EBA examines in the report published on their website as:
- The application of current EU banking, payments, e-money and anti-money laundering laws to crypto-assets.
- Crypto-asset custodian wallet providers and crypto-asset trading platforms, building on the EBA’s July 2014 Opinion on VCs.
- Credit institutions, investment firms, payment institutions and electronic money institutions’ activities involving crypto-assets and regulatory and supervisory issues.
The legal basis for this report and advice of the EBA’s Founding Regulation (Regulation No 1093/2010) which expects the EBA to establish a committee on financial innovation “which brings together all relevant competent national supervisory authorities with a view to achieving a coordinated approach to the regulatory and supervisory treatment of new or innovative financial activities and providing advice for the Authority to present to the European Parliament, the Council and the Commission.”
The report concludes with the EBA will keep under review the need for any further actions within the scope of its statutory competence and stands ready to support the European Commission with any further analysis of issues arising about crypto-assets.
Additionally, EBA also identified various actions it will take in 2019 to intensify the monitoring of financial institutions’ crypto-asset ventures and consumer-facing disclosure practices.
The rising crimes and fraudulent activities involved with cryptocurrencies have made EBA take stringent measures. The EBA is stressing cryptoasset rules on its member nations (EU) to establish consumer protection.
Will the New Rules by EBA help curb the fraudulent crypto activities and gain the trust of crypto assets? Share your thoughts in the comments below.