European Parliament and Council want to fight fraud and strengthen the security of consumers using digital currencies
The European Union wants to set limits on activities related to cryptocurrencies. The Parliament and the European Council reached a provisional agreement this week to create the first regulation in this area, which will strengthen consumer protections against the risks associated with investing in crypto assets and possible fraud. The rule must be given the green light by the European Parliament and the twenty-seven.
The aim is nothing more than to end the lack of transparency that prevails in the digital currency market, to impose a clear legal framework and to lay the groundwork for other countries and institutions wishing to legislate in this area. The regulation negotiated within the EU requires cryptocurrency service providers to identify the issuer and beneficiary of each transaction, a requirement that applies to conventional operations and will improve money traceability.
The new rule applies to any movement, regardless of volume. The Twenty-seven wants to set stricter standards for these investments in this way, so that consumers can be better protected against abuses such as market manipulation and insider trading.
To achieve this, Community authorities will put in place additional controls on providers of this type of service from third countries, which are considered by the EU to be high risk in terms of money laundering. Those cryptocurrency operators who want to operate in the European market also need an authorization from the national authorities. Once this ‘European passport’ has been realised, these providers will have to respond to the European Securities Market Authority.
This body will also be the sole regulator of the “stable currencies” in this segment, cryptocurrencies designed to reduce the volatility of their price. The new regulation will force the issuers of this currency to have liquidity to protect consumers.
Financial Stability Commissioner Mairead McGuinness stressed that the regulations will help fight money laundering and the financing of terrorist activities. “This regulation will give more legal certainty to the crypto market. I hope that other jurisdictions will follow this path and that international cooperation in this area will continue.”
European legislation will also require operators to declare their carbon footprint. This information will be collected by the European Commission, which will prepare a report on the environmental impact of crypto assets -they consume a lot of energy- to introduce sustainability standards in the sector.
Source: La Verdad
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