European Union and cryptocurrencies. New regulations and rules

The European Union imposes a framework for digital asset transactions. The EU keeps its word and starts regulating the cryptocurrency market.

The end of “freedom” in the cryptocurrency market? The European Union is taking digital assets under the microscope

The European Union today approved a set of cryptocurrency regulations designed to lay the foundations for global regulation of digital assets. We have already learned that the new rules will come into force in 2024 and will apply in the 27 Member States of the European Union.

The rules mainly focus on making providers liable if they lose investors’ crypto assets. Investors will finally be protected, which should translate into financial stability. So it will not be surprising that such actions were “inspirational” from the situation with FTX, i.e. money laundering, which was the empire of the “golden child of cryptocurrencies”, Sam Bankman-Fried

Until recently, FTX was the third largest cryptocurrency exchange after Binance and Coinbase, valued at $32 billion during its last funding round in January 2022; but in just two weeks it went from leader to bankrupt. Bankman-Fried was finally arrested in the Bahamas at the behest of US investigators, and Caroline Ellison, a former CEO, and Zixiao “Gary” Wang, a former co-founder of a cryptocurrency exchange, pleaded guilty to federal charges and began cooperating with prosecutors. Bankman-Fried associates face 110 and 50 years in prison respectively. As you can see, the European Union does not want a repeat of entertainment.

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Elisabeth Svantesson, the Swedish Finance Minister, commented on the new rules as follows:

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I am very happy that today we are delivering on our promise to start regulating the cryptocurrency sector. Recent events have confirmed the urgent need for rules that better protect Europeans who have invested in these assets and prevent the crypto industry from being misused for money laundering and terrorist financing.

EU rules primarily ensure the ability to track cryptographic assets (which can be compared to transfers of “normal” currencies), block suspicious transactions and include enhanced consumer protection and safeguards against market manipulation and financial crime. It is worth noting, however, that the rules do not apply to transfers between individuals, but do cover transactions over a thousand euros from self-hosted wallets whenever they connect to wallets hosted by crypto service providers.

There is also an ecological aspect

In addition, there will be no more suspicious services, as all crypto service providers will need a license to issue, trade and secure cryptographic assets, tokens and even stablecoins. There is also an ecological aspect, which is great news. In order for the European Union to more closely monitor the carbon footprint and environmental impact of cryptocurrencies, providers of such services will have to disclose their energy consumption.

Any person who engages in such activities without a license will be entered in the public register of the European Securities and Markets Authority. This is to document non-compliance and highlight organizations that may pose all of the previously mentioned hazards.

Will it have a positive impact on the cryptocurrency market?

Some experts have been counting on these regulations for some time – and not because of greater security and control of this market (probably everyone who has private contact with this market has encountered at least one scam), but because of the potential positive impact on digital asset prices.

Cryptocurrencies have been in a small hole for some time and although the current situation is not the worst, it is far from perfect. Will the new regulations of the European Union really translate into the fact that digital assets will go up and investors will be able to earn? We’ll find out next year.

Source: European Union