In a report published by the European Banking Authority (EBA), the authority has pointed out strict scrutiny should be followed for the digital currencies’ regulations in the year 2019 and further actions to be taken in this regard.
The EBA is the EU agency tasked with implementing a standard set of rules to regulate and supervise banking across all EU countries. Its aim is to create an efficient, transparent and stable single market in EU banking products. The EBA also looks to give detailed examination to the applications of cryptocurrencies operating in the European countries, making sure to fully legalize their operations.
The authority has issued the report in order to align the cryptocurrency regulations with accordance to the European Union law. The report gives prime importance to the applicability and suitability of the European Union law to the crypto assets because as mentioned in the report, “crypto-assets are not recognized in any of the Member States or by the European Central Bank as fiat money (i.e. value designated as legal tender, typically in the form of notes or coins), ‘deposits’ or as ‘other repayable funds’.
A summary of the report explains why the need for such thorough examination has been the felt by the European Banking Authority, stating:
Typically, crypto-asset activities do not constitute regulated services within the scope of EU banking, payments and electronic money law, and risks exist for consumers that are not addressed at the EU level. The EBA recommends that the European Commission carry out further analysis to determine the appropriate EU-level response.
The risk for cryptocurrency or crypto assets holders is normally high due to the fact that they are not regulated by any legal authority as of now within the range of the European Union law. As the risk is higher and the occurrence of fraudulent events in the world of trade numerous times, the EBA urged the European Commission to take matter in its own hands and analyze the regulations of the digital currencies in the European Union countries.
As once before mentioned by the Vice President of the European Commission, Valdis Dombrovskis, “the crypto assets are here to stay”, who believed that the crypto assets will stay in the industry for an indefinite amount of time as per their performance and effect on the financial market.
In contrast to Mr. Dombrovskis’ view on the crypto assets, the policy maker of the European Central Bank, Ardo Hansson believes that crypto assets are “kind of a fairy-tale story” and predicting the future of these assets, described them as “complete load of nonsense”.
Officials from these legal authorities have come out to present their views on the digital currencies and their operations, some believe they are here for good while some believe that they will not last for long. There has been somewhat a confusion on the future of these crypto assets due to the opposing statements by regulatory authorities’ representatives. However, one thing assured is that these crypto assets need to be regulated to be treated as a legal tender and to minimize risks for consumers.
In the report, the European Banking Authority has also offered help to the authorities in the European Union countries to carry out the examination of the financial activities of the crypto assets in a more organized manner. The need for transparency in the operations of cryptocurrencies and public awareness were also the highlighted issues in the report published by EBA, also saying:
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 in relation to any further analysis of issues arising in relation to crypto-assets.
Thus, the urge to conduct an analysis on the regulations of crypto assets has been prompted by the European Banking Authority (EBA) so that the crypto assets operate under safe and legal measures and consumers do not face higher risks. For this, the EBA has also proposed its assistance to regulatory authorities.