Digital asset regulation has become a big topic in 2019 after the rapid rise and fall in cryptocurrency prices at the end of 2017 and 2018 respectively.
SEC has been on the spotlight after postponing the decision on Bitcoin ETFs, formation of regulation sandbox in Kenya to understand the technology better, China’s latest stance on banning cryptocurrency mining in the country are all regulation stories in the media today.
The latest regulation report release from the Financial Stability Board has detailed how European Union countries deal with cryptocurrency regulation.
The details of the FSB report on regulation of cryptocurrencies in the European Union
The report detailed how various countries in the G20 summit deal with cryptocurrency regulation. The new rapidly growing industry is mostly watched by several authorities per country as they try to gain a deeper understanding to it.
The FSB report confirmed that France has assigned four crucial regulators to act as the watchdogs over the cryptocurrency industry. The country’s security and markets authority, the Autorité des Marchés Financiers, will set guideline over any digital asset classifiable as a security.
Furthermore, the regulator reported they will supervise over the issuers and intermediaries dealing with such assets.
The second regulator in the country is the Directorate General of the Treasury (DG Trésor), a wing under the Ministry of Economy, Finance and Industry. The authority reported that its mandate covers regulation and legislation of virtual and digital assets:
“whether they are traditional financial instruments or assets that do not fall under the traditional financial rules.”
Banque de France, in conjunction with the Autorité de Contrôle Prudentiel et de Résolution, are in charge of regulating the payment systems, to which most top cryptocurrencies fall under, and ensure efficient market structures are put into place.
This includes the buying and selling of cryptocurrencies using fiat, as it is considered a form of payment.
Another G20 member looking seriously at regulating the cryptocurrency industry. The country has put together a structure of three regulators namely, the Federal Financial Supervisory Authority (Bafin), the Deutsche Bundesbank and the Bundesministerium der Finanzen (Ministry of Finance) to overlook the activities in the cryptocurrency field.
The Bafin is the chief regulator tasked with functions including licensing and execution of regulation on crypto related businesses, the authorization of crypto derivatives, AML/CFT supervision, as well as market integrity.
Deutsche Bundesbank, the central bank of Germany is the supervisor to matters relating to cryptocurrencies and other financial services matters. The central bank further checks the impact of the cryptocurrency field on its monetary policies.
The structure of regulation in Germany is completed by the Bundesministerium der Finanzen who are tasked with creating regulation around the cryptocurrency industry.
Italy’s economic struggles may have had an impact on the overall uptake of cryptocurrencies in the country. The growth of the industry in the country is being followed by five regulators; Banca d’Italia (BdI), who oversee the payment systems, the Financial Intelligence Unit (Unità di Informazione Finanziaria per l’Italiain), Institute for the Supervision of Insurance and the Commissione Nazionale per le Società e la Borsa.
The final regulator mentioned on the FSB report is the Ministry of Economy and Finance in Italy which represents the cryptocurrency related issues to the EU and places regulations to curb the illegal use of digital assets.
4. United Kingdom
The United Kingdom authorities have enjoyed the spotlight as they continue the regulation process of the cryptocurrency industry. The report stated three major cryptocurrency regulators including the Financial Conduct Authority (FCA), the Bank of England and the HM Treasury. The three have distinct roles to ensure the cryptocurrency investors in the U.K are protected.
The FCA is in charge of the financial institutions and services in the country. Companies adopting the use of crypto assets fall under its jurisdiction as well as public warnings about crypto assets.
“Any token that meets the definition of e-money will fall under the scope of the Electronic Money Regulations. Firms using tokens to facilitate regulated payments may fall under the scope of the Payment System Regulations.”
The HM Treasury on its part woks on policies to “improve outcomes for consumers in the crypto-asset market,” including “ensuring a robust and effective regulatory framework and setting the regulatory perimeter,” as per the report.
The Bank of England is responsible for regulating banks and other financial institutions engaged with crypto assets and the risks associated to the digital assets and impact on the monetary policy set.
The report added Spain to the list as it will be part of the G20 summit meeting this year as a visitor. The country has four authorities overseeing the cryptocurrency industry. First, The Central Bank of Spain (Banco de España) will focus on the cryptocurrency industry and the impact it has on the financial system in the country.
The National Securities Market Commission (Comisión Nacional Del Mercado De Valores, CNMV) is in charge of the financial instruments in the country, hence will regulate cryptocurrencies as transferable assets.
Another regulator, the General Directorate of Insurance and Pension Funds, Dirección General de Seguros y Fondos de Pensiones, regulates insurance companies, intermediaries and pension funds and their exposure to crypto assets.
The Ministry of Economy and Competitiveness will also play a role in crypto regulation by establishing the Spanish sandbox bill that will cover consumer protection and the building of a fair and efficient environment for financial innovation to flourish.
The report by FSB further gave overall EU regulators overseeing the field of digital assets including the European Commission, European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA).