Blockchain: the European Commission is preparing its regulation

Regulations: A first version of the European regulatory project on blockchain and cryptocurrencies has leaked to the press, giving an overview of the regulatory framework envisaged by the commission. Europe wishes to harmonize the regulations of its different member states to avoid confusion and competition between states.

What should we do with cryptocurrencies? France has already started to put in place a regulatory framework for “crypto assets”, a term which in a broad sense designates “tokens” (Bitcoin, Ether, XMR, etc.) issued by the various blockchains. The governments of some European countries have thus supervised this sector.

Europe is also working on a draft regulation, a preliminary version of which has been disseminated on the net in recent days. The 167-page document details the regulatory project that the European Commission wishes to implement on the subject of crypto assets. The authors of the text explain that their ambition is both to offer a harmonized framework for the different Member States, to have sufficient protection for citizens and businesses and to leave room for experimentation and innovation in the field of blockchain and cryptocurrency.

Blockchain Regulations in Gambling

The high popularity of online crypto casinos and the gambling industry, in general, is one more reason why such regulations have to be implemented. The government explains they do it In order to protect citizens and take under control some illegal aspects of cryptocurrency flow.  

However, gamblers and miners all over Europe firmly believe that this governmental initiative is pretty much impossible. Also, lots of casino games’ lovers are sure that the online gambling industry is much safer than most other online gaming and betting services. The cause of that could be the great number of positive comments and reviews on the web, such as where it’s easy to find all of the most important features that define a reliable online gambling platform. They are as follows: the availability of different payment methods, clear privacy policy, a wide range of games offered, high-quality graphics and website functionality, getting additional bonuses option. 

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The Regulations’ Text Explanation

Last year, Bruno Lemaire had already indicated that he wanted European regulations inspired by the pre-existing framework set by France. The text insists, for example, on the publication of white papers for all token issuers, to offer potential customers a description of the tokens, their usefulness and how they work.

The main difference with the French approach lies in the binding nature of the European regulation project: these white papers will have to be approved by the regulators before the issuance of new tokens, and the issuers and crypto-asset exchanges will have to obey a set of rules aimed at ensuring their good faith and financial stability.

To implement these new rules, the regulation intends to give new powers in this area to the European Banking Authority (EBA) and the European Financial Markets Authority (ESMA), which will be responsible for overseeing the application of the regulations. , either directly for certain actors or in coordination with the national authorities for the actors who do not fall directly under the control of the European authorities. The crypto-assets deemed to be the most important (we are thinking here of the arrival of players like Libra) will be placed directly under the aegis of the European financial authorities, which will have new powers of investigation and sanctions on these players.

This text aims to become the cornerstone of European regulation in the field of crypto-assets, mining and gambling and to lay down several definitions in law. It will be supplemented by other texts to come, which must, in particular, redefine the rules applying to crypto-assets playing the role of financial securities (excluded from the current project), as well as on issues related to IT security and the fight against money laundering.

The text is for the moment only a draft and modifications could therefore be made before the final version, but gives a good indication of the direction chosen in terms of European regulation. For Simon Polrot, president of ADAN, a French association bringing together companies working in the cryptocurrency sector, this text is “an important step forward”. The association nevertheless points to certain binding aspects of the text: “we understand that certain provisions of the text are harsher, in order to regulate certain players, but we believe that this could in certain cases pose a risk for innovation in this sector”.

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