The European Banking Authority (EBA) has called for pan-EU rules on bitcoin and other crypto assets.
The London-based regulatory agency reached the European Commission, which drafts EU legislation, with its official report on cryptocurrency laws. The report concluded that the assortment of different crypto laws across the European nations could lead to exploitation of investors and consumers alike.
“Typically crypto-assets fall outside the scope of EU financial services regulation,” EBA said in the study. “Moreover, divergent approaches to the regulation of these activities are emerging across the EU. These factors give rise to potential issues, including regarding consumer protection, operational resilience, and the level playing field.”
Adding further, EBA suggested that the commission was the place to bring every nation under uniformed crypto legislation because of its influence beyond the banking sector.
The EBA’s call comes in the wake of the Financial Action Taskforce’s (FATF) concerns about weak crypto laws and their exploitation by the money launderers. The global financial watchdog said in October that mitigating crypto-enabled money laundering risks would be its top priority in 2019. It had also asked nations to accelerate their supervision of the cryptocurrency service providers, including wallet services, exchanges, and ICO projects.
“By June, we will issue additional instructions on the standards and how we expect them to be enforced,” said Marshall Billingslea, FATF president.
EBA advocated the recommendations made by FATF to the commission while seeking consistent intragovernmental monitoring and reporting of crypto-related financial crimes.
The watchdog also said that a broad approach should be taken to curb the impacts of crypto mining on the environment: mining crypto assets like bitcoin requires a larger amount of computing power and therefore energy.
“Given the pace and complexity of change, it would be desirable for a technologically neutral and future-proof approach to be adopted in developing any proposals should it be concluded that EU-level action is needed,” EBA stated.
The steps taken by the EBA would lead to a more stable legal framework for crypto companies and consumers. A global consensus on Bitcoin could raise confidence among the venture capitalists and other institutional investors that so far have kept their distance from the space over potential legal risks.
EBA stated that unless the commission comes up with a crypto framework, it will maintain a common monitoring template that will assist national regulators in obtaining better data from their firms. EBA also confirmed that it would study crypto-related business models to understand which among them requires to fall under the purview of financial regulations.
At the time of writing, Bitcoin is trading at $4,022 after attempting a small upside correction. In 2018, the digital asset had recorded a fall of 76% from its all-time high at $20,000.