EBA Report Assesses Applicability of EU Law to Crypto Assets
EBA published the results of its assessment of the applicability and suitability of EU law to crypto-assets. The report examines the application of current EU banking, payments, e-money, and anti-money laundering laws to crypto-assets and analyzes the crypto-asset custodian wallet providers and crypto-asset trading platforms, building on the July 2014 EBA opinion on virtual currencies. The report also examines the activities of credit institutions, investment firms, payment institutions, and electronic money institutions regarding crypto-assets, along with the associated regulatory and supervisory issues.
The assessment reveals that relatively low level of crypto-asset activity currently observed in the EU does not appear to give rise to implications for financial stability. However, typically, activities involving crypto-assets fall outside the scope of EU banking, payments, and electronic money regulation, though certain risks exist for consumers, which are not addressed at the EU level. As a result of the development of national regulatory responses, divergences between the member states are starting to emerge, presenting risks to the level playing field. Market developments also point to the need for a further review of EU anti-money laundering legislation.
Therefore, EBA sets out, in the report, advice to EC about the 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. EBA also advises EC to take account of the October 2018 recommendations of the Financial Action Task Force (and any further standards or guidance) regarding, in their terminology, "virtual asset" activities and to take steps, where possible, to promote consistency in the accounting treatment of crypto-assets. Additionally, EBA sets out a number of steps that it will take in 2019 to enhance the monitoring of institutions' crypto-asset activities and consumer-facing disclosure practices. These steps include the following:
- The development of a common monitoring template, which competent authorities can issue to institutions, payment institutions, and electronic money institutions (and, as appropriate, other financial institutions) to monitor the level and type of crypto-asset activity underway
- The assessment of business practices of institutions, payment institutions, and electronic money institutions regarding crypto-asset advertising, pre-contractual information about risks related to crypto-asset transactions for consumers (lack of legal framework, liquidity risk, and so on), and the disclosure of the rights and safeguards applicable to consumers in the context of any crypto-asset services provided by those institutions to assess what actions are needed to ensure high standards of consumer protection
- Report to EC on the conclusion of the BCBS work on the prudential treatment of banks’ holdings of/exposures to crypto-assets
- Keep under review the need for any guidance to support a common application of the prudential rules under the Capital Requirements Directive and Regulation (CRD/CRR) regarding institutions’ exposures to/holdings of crypto-assets
- Perform continuous monitoring of innovation and of the regulatory perimeter, including with regard to crypto-asset activities (ongoing)
Related Links
Keywords: Europe, EU, Banking, PMI, Securities, Regtech, Fintech, Crypto-assets, AML, EBA
Previous Article
ESRB Updates List of Countercyclical Capital Buffers in August 2019Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.