European Regulators Call for 'Common EU-Wide Approach' on Cryptocurrency Regulations

Two major European regulators, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have recently called for a ’common EU-wide approach’ to cryptocurrency regulations, in order to ensure investor protection.

According to a recently published report, the EBA has asked the European Commission to look into unified rules on cryptocurrencies, and noted cryptoasset activities aren’t currently falling under existing EU laws but are “highly risky” for investors.

As such, as first reported by CoinDesk, the regulator urged the Commission there’s a need for a “comprehensive cost/benefit analysis, taking account of issues inside and outside the financial sector, to determine what, if any, action is required at the EU level at this stage.” The regulator’s executive director, Adam Farkas, stated:

The EBA's warnings to consumers and institutions on virtual currencies remain valid. The EBA calls on the European Commission to assess whether regulatory action is needed to achieve a common EU approach to crypto-assets. The EBA continues to monitor market developments from a prudential and consumer perspective.

The EBA also asked the Commission to take into account the crypto-focused guidelines the Financial Action Task Force (FATF), the global anti-money laundering (AML) watchdog, is expected to issue this year. The EBA itself revealed it plans on monitoring the crypto sector.

The European Securities and Markets Authority (ESMA) also published a report on cryptocurrencies and initial coin offerings (ICOs). In it, it claims some cryptoassets could fall under the European Union’s MiFID financial framework and be considered financial instruments.

Steven Maijoor, ESMA’s chairman, noted some adjustments would have to be made as “existing rules were not designed with these instruments in mind,” which means “certain requirements are not adapted to the specific characteristics of crypto-assets.”

As for the cryptocurrencies that wouldn’t fall under MiFID, these would still have to comply with AML rules. To further protect investors, risk disclosure should be enforced to alert them of potential risks. Maijoor added:

In order to have a level playing field and to ensure adequate investor protection across the EU, we consider that the gaps and issues identified would best be addressed at the European level.

Meanwhile, as CryptoGlobe covered, the cabinet of the Irish government has approved a law to implement a new regime of financial regulations, a large part of which outlines regulations for the cryptoasset industry in the country.

Brazil's Ministry of Justice Reveals It's 'Studying' Bitcoin Over Potential Use in Crime

Brazils Ministry of Justice and Public Security, led by Sérgio Moro, has recently revealed through an interview that it’s ‘investigating« (studying) bitcoin, the flagship cryptocurrency, to better understand how it can be used in crimes.

The Ministry’s goal is to reportedly be able to understand the nascent technology it’s based on, and to potentially launch investigation norms authorities can use. Within the Ministry the National Strategy to Combat Corruption and Money Laundering (ENCCLA) is responsible for overseeing cryptocurrencies, and has been having regular meetings on the issue.

According to local news outlet Criptomoedas Fácil, the ENCCLA has over 70 agencies in it, and has revealed cryptocurrencies and blockchain technology have been debated with the goal of “deepening the study on the circulation of these assets to individuals and companies in Brazil.”

Speaking to the news outlet, the Ministry revealed:

Despite the good use that can be made of the new technologies regarding virtual assets, they unfortunately have also been used to commit crimes. The theme still poses challenges not only for our country but for the international community.

Camila Colares, director of the Asset Recovery and International Legal Cooperation Department (DRC) noted that there’s still a lot to discover when it comes to the topic, and as such the ENCCLA is set to continue looking into it with a criminal approach in mind.

Colares was quoted as saying:

The regulatory difficulty we have today is because we still do not know the potentialities - negative and positive - of these virtual assets.

Some of the so-called actions the ENCCLA has already taken to debate the topic has seen it create a glossary of cryptocurrency-related terms, create a survey on the typologies of money laundering and corruption through the use of cryptocurrencies, and hold a workshop on the use of cryptos with “national and foreign participants from the public and private sectors.”

The organization has also studied cryptocurrencies to understand how these can be used to launder money, and determined there’s a need for regulations that can prevent it to be used by criminals, although an exact approach hasn’t been determined.

It’s worth pointing out the cryptocurrency scene has been growing in Brazil. Last year the country launched a national blockchain association, and soon after a university within launched the world’s first master’s degree in cryptofinance. Earlier this year, the country’s new president Jair Bolsonaro shut down an indigenous cryptocurrency project.