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The Committee of the European Parliament Advised for Crypto Rules as per International standards

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Jayashree Ingle Follow

INDIA

Apr, 14 2020

Apr, 14 2020

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The Committee by the European Parliament has published a study finding the ambiguities in the crypto regulations at the international level. The report includes the developments of crypto assets, regulatory concerns, and responses at the international level. The report had been prepared at the request of Committee on the Economic and Monetary Affairs (ECON) which oversights the European Central banks and their financial infrastructure.

The Report emphasizes the necessity for bringing the stable coins, fundraising through tokens, and the money laundering through crypto mining under regulations.

The report states that to avoid the regulatory arbitrage, rulemaking on crypto-assets should place at the European level, preferably in the execution of international standards.

The report also emphasizes the continuation of the cooperation of the Financial Action Task Force (FATF) and the European Union. It also advises the EU to align with FATFS’s international standards.

Crypto Mining Identified as Money Laundering Threat

The report reveals that crypto mining can be used as a vehicle for crimes by criminal organizations.  

The report states that the newly mined coins by definition of law are considered ‘clean’. So if any bank or any other entity is willing to convert them into fiat currency or other crypto assets, the converted amount will be considered as clean as well. So the first regulatory step could be to seek the technique and should be utilized subsequently. It proves to be an important blind spot, it can be considered as a countermeasure.

Stable coins – a new challenge for regulators?

The report discloses that most stable coins in circulation, are explained as having a ‘local footprint.’ However, the parliament notes that the rise of global stablecoins like Libra from Facebook could poses challenges to the regulators.

The parliament is actually concerned with the observations of economist John Vaz which sees Libra as a big threat.

The function of the Committee of Economic and Monetary Affairs (ECON)

The Committee of Economic and Monetary Affairs (ECON) is a Committee under the European Parliament which looks after the regulations of financial services. Oversights European Central bank and international financial systems.


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Jayashree Ingle

CBW - External Analyst

INDIA

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