The European Union has taken a major step forward in its bid to regulate the crypto assets world after its executive branch issued its most extensive proposals to date for supervising the growing sector.

The measures suggested within the EU’s digital finance strategy include cryptocurrencies not presently included in general regulation as well as a number of so-called stablecoins.

The aim is to not just reduce volatility in cryptocurrency trading or to provide more regulatory certainty for investors but also to reduce market fragmentation in Europe by ensuring that once a crypto trading company is approved in one EU state, it is free to operate in all other EU states.

The Regulation on Markets in Crypto Assets or MiCA bill will provide definitions on what constitutes a crypto asset as well as various token subcategories. It will also lay down rules for digital asset custody and capital requirements as well as the relationship between token issuers and token holders.

There are also measures to deal specifically with stablecoins following concerns raised by a number of finance ministers within the EU earlier this month.

If the bill is passed it would make the EU one of the most regulated centres for crypto trading and digital assets. However, there is likely to be a lengthy legislative journey ahead. The bill must be debated by both the European Parliament as well the different national governments before it can be passed into law. Meanwhile the Commission has stated that it hopes to see the framework in place by 2024.

The fact that any law must be implemented at a national level may prove to be a sticking point. The Commission has stated its preference for more regulatory harmonisation at an EU-wide level.

But achieving harmonisation has proved difficult in the past and EU states have recently reduced a 2017 Commission proposal to bolster supervisory powers at an EU level in favour of maintaining power at a national level.

Source (full article): Finextra