The Association for Financial Markets in Europe [AFME], a representative of global and European banks, has called for supervisory convergence on the regulation of crypto-assets across Europe. As the nascent market gains momentum, AFME conducted a cross-jurisdictional analysis of crypto-asset taxonomies and the regulatory approaches across 11 jurisdictions in Europe to shed light on current events. This was highlighted in a paper published by the AFME.
The paper suggested recommendations for delivering supervisory convergence on the regulation of cryptocurrencies. It added that the need for merging emerged due to the lack of harmonization among regulators. A harmonized approach towards cryptocurrencies could lead to innovation and provide an opportunity to push the EU’s objectives to create a European Capital Markets Union [CMU] and Digital Single Market [DSM].
The report read,
“If regulators in Europe were to converge towards a harmonised approach to crypto-assets regulation, this could remove barriers to innovation and provide an opportunity to further the objectives set by the European Union to create a European Capital Markets Union (CMU)10 and Digital Single Market (DSM).”
Europe aims to be the global leader in crypto-assets and according to AFME, it is vital for regulators to collaborate and understand the market, technology and the needs of its users.
“This will support Europe becoming a leader in financial innovation and contribute to the European Commission’s (EC) ambition to make “Europe fit for the digital age.”
Additionally, the report highlighted the potential benefits and risks related to crypto-assets, while also putting forth the question relating to its use within the financial realm focusing on governance, legality, regulations, and operations. Even though national governments and other regulatory authorities have initiated the process of developing individual approaches for regulation, AFME opined that there is an opportunity for NCAs, EU bodies [like European Banking Authority], European Securities Markets Authority (ESMA), ECB, and EC to collaborate. This could lead to fostering convergence on the regulatory treatment of crypto-assets in Europe.
“This will support the emergence of safe, innovative products and services at scale, as market participants will be clear on which rules apply to their activities, particularly when conducting business across European jurisdictions.”