The European Central Bank (ECB’s) banking supervision division announced in a statement on Wednesday that it would consider regulating digital assets in the wake of pan-EU licensing rules that are set to come into effect by 2023.
It has detailed the necessary steps that need to be taken when harmonising crypto licensing requirements in Europe.
The ECB said that it would be taking steps to regulate digital assets as “national frameworks governing crypto-assets diverge quite extensively” and given the seemingly differing approaches to harmonisation following the passage of the Markets in Crypto-Assets (MiCA) regulation and the Basel Committee on Banking Supervision issuing guidelines for banks’ exposure to crypto.
The criteria to be applied to assess licensing requests for crypto-related activities and services is the Capital Requirements Directive.
Crypto firms’ business models, internal governance, “fit and proper” assessment might be considered by the central bank. In addition, the ECB said it will rely on data provided by national Anti-Money Laundering (AML) authorities and the financial intelligence units of respective countries to assess potential risks.
The ECB highlighted the importance of Senior managers or board members with relevant IT knowledge and chief risk officers with robust experience in this area as safeguards. “The higher the complexity or relevance of the crypto business, the higher the level of knowledge and experience in the field of crypto should be.”
The harmonisation of crypto regulations has always been seen as a necessity. Jean-Marie Mognetti, CEO of CoinShares said in a Reuters report that Europe has more complex crypto regulations than other regions, which deterred business from growing in the region.
With the new EU-wide legislation coming into force, this could potentially be a “game-changer” and would help the European cryptocurrency market gain credibility – with cryptocurrencies arguably being slower on the uptake throughout Europe when compared to the rest of the world.