September 16, 2020 | Jon Hautamäki
New EU-wide cryptocurrency regulation in the works
The EU Commission is planning new EU-wide cryptocurrency regulation. There is currently hardly any concrete information on the new regulation, but according to the information given by the EU Commission, the purpose of the new regulation is to clarify the legal status of cryptocurrencies in the EU as well as to increase the oversight and supervision of cryptocurrencies. The new regulation will most likely be carried out as an Regulation instead of a Directive, and thus applicable in all EU member states without any need for separate implementation of the new regulation.
According to the information given by the EU Commission, the new regulation will broaden the definition of cryptocurrency and will divide cryptocurrencies into different categories based on their use such as payment tokens and investment tokens. In addition, the supervision of cryptocurrency providers shall be increased and the prerequisites for cryptocurrency provider registration tightened. In the new regulation, the conducting of cryptocurrency transactions will require proper identification of the transaction parties, which presumably will mean strong electronic identification.
The EU Commission also plans to amend the regulations concerning financial instruments, whereby the regulations would apply to cryptocurrencies that are considered as financial instruments or so-called security tokens. Security tokens would thereby be included at least in the market abuse regulation (EU 596/2014) as well as the short selling regulation (EU 236/2012).
The new regulation will also regulate so-called stablecoins which are cryptocurrencies tied to the value of a fiat currency. It is still unknown how the EU Commission would react to a cryptocurrency tied to the value of the Euro.
We at Nordic Law will naturally follow the progress of the new planned EU-wide cryptocurrency regulation and we will cover the new regulation in detail when we know more.