Behind the scenes of EU crypto regulations

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By Joseph Schifano, Global Head of Regulatory Affairs at Eventus

Defining a new regulation of the crypto market in Europe is a delicate balance, according to Peter Kerstens, adviser to the European Commission, at the recent Shining a Light on Digital Asset Markets 2021 conference, organized by Eventus and the Association for Digital Asset Markets (ADAM).

Speaking alongside his American peers, Kerstens spoke of the particular challenges facing the European Commission. EU regulations for crypto, he explained, must avoid regulatory divergences. The development of a common high-level framework for digital assets must take into account the wide range of attitudes that exist within Member States, with their own regulatory authorities. These range from the more conservative and cautious nations to liberal and pro-innovation members. We wanted to preserve an EU-wide pan-European market for crypto assets, he says.

From aversion to understanding the crypto journey of EU regulators

The EU has seen a trend, elaborates Kerstens, from an aversion to crypto assets to a greater interest in them. However, there needs to be a balance between anticipating their enormous potential and better understanding the risks that exist in these new markets. Digital assets, however, need to be embraced so that investors don’t have to move abroad. By forcing trading to stay onshore, we encourage participation in the influence and development of regulation.

For crypto assets, this regulatory journey began with a very strong demand from market players for legal clarity. At the corner of a triangle, Kersten explains, this first legal basis must be weighed against two other important factors. Enabling responsible innovation enables law-abiding participants to bring new products and services to market – in return, avoiding obvious market failures, at the issuance level and as part of schemes. fraudulent.

Eventus, one of the leading trade surveillance and market risk management companies, is at the forefront of tackling this third challenge. By understanding and addressing the complexities of consuming hundreds of different data streams and interpreting regulations regarding market surveillance with the flexibility to adapt by region, market model and regulatory change, the Validus platform of the company is ready for the influx of unique requirements as this new landscape emerges.

Kersten explains that because it is early, regulation will not solve all problems in advance. Flexibility is the key here, and the question too early, too late, when to regulate? is resolved by letting development continue and letting market demand set the pace. Maintaining balance seems more important than speed as he explains – avoiding one corner of the triangle while stressing others.

Reassuringly, Kerstens’ clear message is that the Commission is engaged, competent and broad-minded. The digital asset markets have exciting potential, but the road ahead comes with many challenges. The pace is fast and the burgeoning nature of these new underlying infrastructure markets, its lack of standards, and the transient nature of its liquidity mean the journey will be far from straightforward. So those serving this market had better prepare for a few twists along the way.

To watch a replay of all conference sessions, click HERE.

Joseph Schifanois Global Head of Regulatory Affairs at Eventus. Mr. Schifano is an attorney with over 20 years of experience in market surveillance matters, most recently as Deputy General Counsel and Global Chief Compliance Officer (CCO) of Tower Research Capital in New York, as well as senior regulatory roles at two global banks and the New York Stock Exchange (NYSE).

2021 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.

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