When it comes to the European Union, the demands of creating a comprehensive regulatory structure are multiplied. The EU is home to both advanced fintech nations and those lagging far behind, which makes the regulation of crypto even more difficult to negotiate and navigate. It is also one of the reasons that Parliament endeavors to make new rules at the highest level, rather than allow for piecemeal approaches.
Unfortunately, there is still suspicion when it comes to potentially loosening the grip of central banks and their ability to control the flow of money, and the EU is well-recognized for its massive financial services regulation.
Presently, the EUR is concerned about the relatively recent trend of stablecoins, such as Facebook’s Libra, and the potential of issuing tokens as a mean of creating a private, non-governmental currency. Blockchain transparency remains another ongoing hot topic, yet financial institutions are not prohibited from gaining exposure to crypto assets under current regulations. The EU is working on a roadmap for regulation, which will pave the way for new legislation, challenges and opportunities.
Interestingly, the European Banking Authority has changed its tune on cryptocurrency in recent years. Their previous warnings about investing in digital currency are more nuanced today. While it can be challenging to wade through all of the regulations, it pays to stay apprised of the latest guidance from the EU. Read more in my recent article.