ECB warns countries of the euro zone of crypto regulation
ECB warns countries of the euro zone of crypto regulation
The European Central Bank will warn the countries of the euro zone of the dangers this week that could arise if national regulatory authorities cancel the upcoming EU cryptocurrency rules and emphasize the difficulties in introducing an efficient supervision of the rapidly developing "Wild-West" sector.
The European Commission agreed a comprehensive package of standards for the crypto industry last week. However, the central bank is concerned about a chaotic patchwork of national regulations that regulate the overlap between banks and crypto companies before the package will be fully implemented next year after it is to come into force.
She will address the urgent need to "harmonize" at a meeting of her supervisory board on Tuesday, said people familiar with the discussions.
"This is a big challenge," said a national supervisory authority in a country of the euro zone. "With glow [the EU’s digital regulation package] it is better to say in 18 months:" Until it is in there, do what you want, there are no regulations "or should you try to get it under control?"
Germany was the most proactive in his efforts to tame digital currencies. It used the EU money laundering guideline of 2020 to oblige companies that keep crypto-assets on behalf of customers and enable trade to apply for special licenses according to German banking law.
Other countries of the euro zone such as the Netherlands initially focused on registrations to comply with the money laundering control, but several more comprehensive measures have taken into account after Russia's invasion of Ukraine showed the potential of crypto for illegal means as the circumvention of sanctions. The concerns about consumer protection have also increased, since the value of Bitcoin, the largest cryptocurrency, has fallen by more than 70 percent compared to its maximum.
Another regulatory authority at the state level said that the national authorities "are put under pressure by their industry must find answers". Some banks have asked for clarity which activities they can certainly do, while some crypto companies have pushed to regulate to strengthen the credibility of their sector, while others have pleaded for a easier approach.
The ECB has concerns about making a decision about crypto -related licenses that are sought by banks if there is no European framework, said a person familiar with the matter. It will discuss this topic - and the general necessity of harmonizing the approaches of the euro zone - with the regulatory authorities of the 19 Member States at tomorrow's supervisory board meeting.
Andrea Enria, chair of the ECB banking supervisory board, told MPs in Brussels last week that the central bank sees "differences in the national regimes around crypto" and that equal competitive conditions were "important". He said that it would "focus on internal principles to ensure that you have a smooth authorization [and] license procedures for banks that work in these areas".
The intervention could encounter resistance from countries that want to continue alone, but some will probably support the ECB's efforts. "There is clearly a problem for both harmonization and timing; the complete application of Mica will take some time, so it is important to act soon," said a person who is familiar with discussions with a third national supervisory authority.
Germany's Bafin wax dog said that his regime was “largely equivalent” with the planned mica legislation. So far, she has awarded four licenses to the FinTechs Coinbase Germany, Kapilendo Custodian, Tangany and Upvest and none to traditional banks that would also need a license if they would expand into crypto custody.
More than 20 permits would be checked, added the BaFin that some were rejected because applicants could not meet the requirements of the supervisory authority, which include aspects such as internal controls and IT platforms for money laundering control.
A lawyer said that it was "not unusual" that Germany is going early in regulation, "especially where it was about consumer questions". The ECB refused to comment on what would be discussed at the Supervisory Board meeting.
Source: Financial Times