The European Commission, the legislative body of the European Union, is in the final stages of a proposal for the region’s first cryptocurrency and digital finance framework, according to a report by financial news outlet IFC Review.
Successful passage of the law and its subsequent adoption would provide for an optimal legal environment for crypto firms to build their business and add to the European economy, the report noted.
The Commission has spent the last year holding consultations with experts and defining cryptocurrencies. Some of these include recognizing digital currencies—both crypto assets like Bitcoin and stablecoins—as financial instruments and introducing a framework for blockchain-based tech platforms.
Bruno Schneider–Le Saout, the chairman of the crypto advocacy body European Blocktech Federation, noted the qualification of crypto-assets as financial instruments placed the asset class within the extensive set of European and national legal instruments that regulate the region’s trillion-dollar financial market.
He further called the forthcoming legislation as “historic,” considering the vast opportunities it opens for businesses and entrepreneurs to build digital finance applications.
“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 tokenization of traditional financial instruments,” said Schneider–Le Saout.
The legislation also detailed a plan to create a single market for cryptocurrencies so they can be sold across all European countries. This is similar to the introduction of the Euro in 1999, which created a unified currency for all Union members at the time.
Such an arrangement—for cryptocurrencies—would be made around five aspects: Overall scope, subject matter and definitions, requirements for crypto-asset service providers, requirements on issuers of stablecoins, and supervision of those issuers, the report said.
The legislation comes as Commission vice president Valdis Dombrovskis stated in June that the lack of legal certainty around cryptocurrencies impeded growth and business opportunities for the region.
He said at the time, “This is a good chance for Europe to strengthen its international standing and to become a global standard-setter, with European companies leading new technologies for digital finance.”
Meanwhile, the current proposal is targeting a rollout in the third quarter of this year. However, delays can be expected due to the ongoing coronavirus pandemic, the report noted.