The European Central Bank (ECB) has released its intentions to form a crypto regulatory framework that aims to make how banks offer crypto assets more consistent.
There is currently no harmonised regulatory framework governing crypto-asset activities and services in the EU, but the ECB said this will change with the finalisation of several regulatory initiatives at European and international level.
Within the EU, the Council presidency and European Parliament recently reached a provisional agreement on the markets in crypto-assets (MiCA) proposal, which will bring crypto-assets under a regulatory framework.
The ECB said that internationally, the Basel Committee on Banking Supervision is monitoring banks’ exposures to crypto-assets and will issue its detailed rules on the prudential treatment of such exposures in due course.
However in the meantime, the ECB acknowledged that national frameworks governing crypto-assets diverge quite extensively.
The bank said the framework will highlight the most relevant points of the Capital Requirements Directive (CRD) criteria when assessing licensing requests covering crypto-asset activities and services.
The bank said it will pay particular attention to business models, internal governance, and fit and proper assessments.
In a statement, the bank said, “Licensing of credit institutions is essential for the public regulation and supervision of the European financial system. Indeed, confidence in the financial system depends upon public awareness that only licensed institutions are operating within it.”
The bank added, “At the same time, licensing should not stifle competition, financial innovation or technological progress. Crypto-asset markets are developing apace, with banks considering whether to get involved, and it is the role of the European Central Bank – as the authority in charge of banking authorisations in European banking supervision – to ensure they do so safely and soundly, while respecting the above principles.”
Earlier this year, reports revealed that the ECB was expected to issue a warning to Eurozone countries around the need to harmonise cryptocurrency regulation, the Financial Times has reported.
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