The European Commission Adopted the Digital Finance Package for the Digital Transformation of Europe
September 24, 2020 6:03 pm
The European Commission is moving one step closer to getting a concrete legal framework for digital finance and provide more legal clarity and certainty for the cryptocurrency industry in its member states.
The European Commission officially adopted a new digital finance package including digital finance and retail payments strategies, as well as legislative proposals on crypto assets on September 24 and stated that the new package describes the first time that the authority proposed new legislation on crypto assets.
Since part of the new legislative proposals, the EC pays special attention to stablecoins, a type of cryptocurrency that secures value to an external reference like the United States dollar or an algorithm.
Particularly, the proposals aim to introduce more stringent requirements for stablecoin issuers in terms of capital, investor rights, and supervision, the text of the proposal reads.
Internally, the EC aims to require stablecoin issuers to complete authorization by a national competent authority if the outstanding amount of stablecoins is above 5 million euro ($5.8 million). The authority also wants to assist crypto-asset issuers to publish a white paper with obligatory disclosure requirements.
Small and medium-sized enterprises will be exempted from the publication of such a white paper where the total consideration of the offering of crypto assets is less than 1 million euro ($1.1 million) over 12 months. The exclusion makes sure that “the requirements imposed on crypto-asset service providers are proportionate to the risks created by the services provided.”
As per the authority, the new measures will be important in supporting the EU’s economic recovery as it will unlock new ways of channelling funding to Europe’s businesses.
“By making rules safer and more digital-friendly for consumers, the Commission aims to boost responsible innovation in the EU’s financial sector, especially for highly innovative digital start-ups.”
The package is now subject to consideration by the EC’s legislative counterparts, the European Parliament and the European Council.
The digital finance strategy sets out general lines on how Europe can support the digital transformation of finance in the coming years while regulating its risks.
There are four main priorities of this strategy: removing fragmentation in the Digital Single Market, adapting the EU regulatory framework to facilitate digital innovation, promoting data-driven finance and addressing the challenges and risks with digital transformation, including enhancing the digital operational resilience of the financial system.