Eternity Law International News Overview of a regulatory and legal regime for blockchain in the EU

Overview of a regulatory and legal regime for blockchain in the EU

September 4, 2022

The EU executive, the Cοmmission, recognizes the significance of transparency of regulatory and legal regime for blockchain. Fields related to cryptocoins are getting more popular nowadays as the virtual currency market is now being regulated by the law.

The EU demonstrates support for established regulative norms for blockchain regulation aiming to prevent legit and regulative fragmentations. The Cοmmission issued many official recommendations for the control of cryptocoins and crypto-related assets with the purpose to attract more funds contribution and guarantee investors protection under the law. This adopted package revises many regulations for virtual assets and establishes a legit structure in the EU for applying blοckchain in dealing with tradable financial assets.

Launch of a digital EUR

The ECB and Cοmmission are cooperating on a procession of a wide variety of policies and legal aspects that refer to the future launch of a digital EUR. The authorities are now learning this grounded on their mandates and eligibility. With this, the regulators want to respond to the fast digitalization of society and give persons and legal entities other options for the virtual currency they currently have in accounts with commercial banking structures by adopting a legal regulation of blockchain. 

Adoption of an EU law on digital assets

Virtual money and crypto-related assets classified as ‘financial tools’ according to the MiFID (an EU law that enhances the clarity across the EU’s monetary markets and standardizes the regulative disclosures necessary for legal entities conducting activities in the EU) have already been referred to as fungible and tradable financial tools market law. But these obligations were imposed earlier that the rapid influx of digital assets and DLTs. This could slow down these technological innovations. Hence, the Authorities introduced a testing period for all parts of the financial system that are considering carrying out payments in financial tools in digital-asset forms. The testing period gives permits for exclusion from already applicable laws and offers regulative agencies and entities to try to apply state-of-the-art options utilizing blockchain.

For those virtual currency assets that are not encompassed by the definition of ‘financial tools’, the Authorities have created a specialty new regime. It would greatly amend all other European and local rules administrating the operations with such virtual currency assets.

The MiFID will strongly encourage new technologies in the virtual currency market while guaranteeing security for market players and guarding the integrity of the crypto market. This law consists of a set of norms such as restricted insider trade or tailgating and encompasses legal entities that carry out the following services:

  •         Issuance of cryptocoins,
  •         Dealing with cryptocoins,
  •         Operating e-wallets,
  •         Crypto exchange.

Fostering dialogue and cooperation between national and EU-level lawmakers and regulative bodies

The EU Blοckchain Partnership (EBP) is set to establish a blockchain regulatοry sandbοx by the end of 2022. “The pilot regime presents a so-called ‘sandbox’ approach – or controlled framework – which allows temporal exemption from current rules so that regulators can obtain expertise on the DLT usage in the markets.

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