The European Banking Authority (EBA), a regulatory agency of the European Union, has published its assessment into the application of EU law to crypto assets. The agency, which is headquartered in London, recommends that the European Commission tables a response to the risks regulators associate with the field such as money laundering.
Crypto Activity Is Outside Scope of EU Banking Rules
In the report released on Jan. 9, the EBA examines the application of current EU banking, payments, e-money and anti-money laundering laws to crypto assets, wallet providers and trading platforms, as well as the related activities of credit institutions, investment firms, payment institutions and electronic money institutions.
It determines that the current relatively low level of such activity in the EU does not create a risk for financial stability. However, the agency also found that activities involving crypto assets typically fall outside the scope of EU banking, payments and electronic money regulation. It believes this raises risks for consumers that are not addressed at EU level.
The report further details that, as a result of the development of national level responses, regulatory differences between European countries are starting to emerge. It fears these present risks to the level playing field the union is supposed to maintain between its members. The banking agency also sees a need for a review of EU anti-money laundering legislation.
More Monitoring of Institutions’ Activities
Following the findings of the report, the EBA has advised the European Commission to make a comprehensive cost/benefit analysis to determine what action is required at the EU level at this stage. The agency also advises the commission to note the recommendations of the Financial Action Task Force from October 2018, and to take steps to promote consistency in the accounting treatment of crypto assets. The banking regulator also plans a number of steps to take in 2019 in order to enhance the monitoring of institutions’ activities and consumer-facing disclosure practices.
The agency’s Executive Director, Adam Farkas, commented: “The EBA’s warnings to consumers and institutions on virtual currencies remain valid. The EBA calls on the European Commission to assess whether regulatory action is needed to achieve a common EU approach to crypto assets. The EBA continues to monitor market developments from a prudential and consumer perspective.”
What are your thoughts on the European Banking Authority’s reports into crypto asset regulation? Share your thoughts in the comments section below.
Images courtesy of Shutterstock, EBA.
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