Valdis Dombrovskis, Executive Vice President of the European Commission for the Service of the People.
BERND VON JUTRCZENKA | AFP | Getty Images
The European Commission on Thursday proposed a plan to regulate crypto assets, which will be its first attempt to monitor this emerging technology.
The European Union’s executive body has stated that “the future of finance is digital”, but it is important to mitigate “any potential risks”.
The new legislation hopes to reduce these risks for investors while also giving legal certainty to those who issue these assets.
European Commission Executive Vice President Valdis Dombrovskis (Valdis Dombrovskis) said in an interview with CNBC on Thursday that one of the purposes of the new legislation is to reduce the EU’s “market fragmentation” in this area, and It was mentioned that many digital financial providers only work in one member country.
The new plan will mean that crypto asset companies authorized by one of the 27 EU countries will be able to provide services among all other member states.
At the same time, stricter regulations will be imposed on companies issuing so-called “stable coins.”
The new rules will definitely have an impact on the digital project Libra announced by Facebook last year. Facebook’s original idea of Libra would have been backed by multi-currency reserves, but after that, due to strong opposition from regulators, the company changed its strategy, which they feared would damage the financial system.
However, it may take more than a year for the EU to implement these recommendations.
Dombrowskis told CNBC: “The legislative process will take at least a year, and it may even be longer, depending on how much priority the member states and the European Parliament will give.”
The latest proposal must be approved by the EU government and the EU Parliament (the EU’s only directly elected house) before it can become law.
‘Do not close the door to UK financing’
The European Commission also proposed plans to develop capital markets within the EU on Thursday. The so-called capital market alliance aims to make capital access to 27 EU countries easier. This was the dream of the previous government in Brussels, but they have been working hard to promote cross-border investment.
Dombrowskis told CNBC: “The Capital Markets Alliance is a project before Brexit, but the fact that Brexit and the EU’s largest financial center are about to exit the single market means that we urgently need to push forward. The development of the capital market alliance,”
The UK is home to the City of London, the largest financial center in Europe. However, with Britain’s departure from the European Union earlier this year and the end of the transition period in December, the European Union will no longer be able to claim that it owns the largest financial center on the European continent.
However, Donbskiski said that the EU’s latest plan did not “close the door for us to obtain financing from the United Kingdom or the United States.”
Among the latest measures, the EU hopes to support more cross-border investment, make the bankruptcy rules of 27 countries more unified, and make supervision more consistent. The law must also be approved by European legislators and governments before it can be formally passed.
— CNBC’s Ryan Browne wrote this article.