Cryptocurrencies in Europe

From Wikicryptos

The general notion of cryptocurrencies in Europe denotes the processes of legislative regulation, distribution, circulation and storage of cryptocurrencies in Europe.

There is still no unified regulatory framework regarding cryptocurrencies in the European Union. However, various authorities within the EU have given a number of legal initiatives for creating the consensus on key issues of cryptocurrency distribution.

Legality of cryptocurrencies in Europe[edit]

There are some regulatory policy recommendations for EU states to follow in the course of cryptocurrency adoption and regulatory framework development that are given below in chronological order.

In 2013, the European Banking Authority (EBA) issued a public warning about the possible risks of virtual currencies.[1]

In 2014, The EBA issued a decision on virtual currencies, which included a list of more than 70 risks associated with its dissemination.[2]

In 2016, the European Central Bank issued an analysis of virtual currency schemes, acknowledging the potential advantages of virtual currencies.[3]

The European Securities and Markets Authority (ESMA) published a study in 2017 on the use of distributed ledger technology (DLT) in securities markets.[4]

Also in the same year, ESMA released two statements on initial coin offerings (ICOs), one on investor risks and the other on the laws that apply to companies that participate in these offers. After that, the European Commission directed the EBA and ESMA to evaluate the applicability and appropriateness of the existing EU financial services regulatory framework to crypto assets.[5][6]

In 2018, the European Parliament released two reports about virtual currencies and central banks’ monetary policy.[7][8]

In 2018, The Financial Stability Board (FSB) released a study on the crypto asset market and its potential pathways for future financial stability concerns.[9]

During the G7 meeting of July 2019 risks posed by global stablecoin projects were discussed.[10]

FINMA, the Swiss financial authority, published a supplement to its ICO guidelines outlining how it treats so-called ‘stable coins’ under Swiss supervisory law.[11]

In 2019, ECB highlighted the paper series with a discussion about stability in crypto-assets.[12]

In September 2020, The European Commission has today adopted a new Digital Finance Package, including Digital Finance and Retail Payments Strategies, and legislative proposals on crypto-assets and digital resilience.[13]

In 2020, the ECB released a report about stablecoins’ regulatory status.[14]

In 2020, the European Commission proposed a pilot regime for market infrastructures that wish to try to trade and settle transactions in financial instruments in crypto-asset form.[15][16]

In July 2021, The European Central Bank is launching a pilot project for the "digital euro". Also, it has officially launched a 2-year-long study on the creation of a Digital Euro and the various nuances that would involve.[17]

In July 2021, the European Commission released a statement that would apply what is known as the travel rule to crypto transactions to make them more traceable.[18][19]

In September 2021, European Securities and Markets Authority published a report on Trends, Risks and Vulnerabilities where crypto assets are considered a high-risked innovational financial technology.[20]

Cryptocurrency market  [edit]

According to Chainalysis, Europe's growth was largely driven by so-called "whales", large institutional investors shifting enormous sums of cryptocurrency.[21]

According to Chainalysis, Europe has the world's largest crypto economy, collecting $1 trillion in the previous year, or 25% of all crypto activity worldwide.[22]

Different countries have their own approach to cryptocurrencies legalization, distribution, and storage.

Germany[edit]

Germany continues implementing crypto into the national regulation. First, they started with licensing crypto custody service providers and defining crypto assets as financial instruments.[23] Now private funds are allowed to keep 20% of their investments in crypto.[24]

In August 2020, the Ministry of Finance and the Ministry of Justice of Germany promulgated a bill to regulate electronic securities in the country (eWpG-E).[25]

United Kingdom[edit]

Although the United Kingdom affirmed in 2020 that crypto assets are property, it has no cryptocurrency regulations and does not consider cryptocurrencies to be legal tender.[26][27]

Mining of cryptocurrencies is permitted.[28]

In March 2022, the Financial Conduct Authority (FCA) declared that all cryptocurrency ATMs in the country were illegal and would need to be shut down. None of the ATM's operators had successfully registered with the agency. The FCA cited a failure to comply with know your customer laws (KYC), which track and prevent money laundering, as well as the high risk to customers, due to a lack of regulation and protection. At the time, Coin ATM Radar listed 81 such ATMs in the country.[29][30]

Ukraine[edit]

In September 2021, the Parliament of Ukraine passed a law to legalize cryptocurrency. The law divided virtual currencies into secured and unsecured assets and establishes an obligation for crypto service providers to comply with anti-money laundering laws.[31]

The Netherlands[edit]

In July 2020, The Dutch Central Bank (DNB) said the euro system's central bank digital currency (CBDC) should be more programmable than Bitcoin.[32][33]

Estonia[edit]

Estonia published its AML Bill as early as 2018. According to the Organization for Economic Cooperation and Development (OECD), Estonia's tax policy is one of the most competitive in the world. There is no income tax in this jurisdiction, therefore funds received through ICOs are not subject to it, and Bitcoin and altcoins are not subject to VAT.[34][35]

France[edit]

Government policy appears to be supportive of crypto, if it would be possible to regulate.[36] In March 2020, the Central Bank of France began to study the topic of CBDC, in May it sold securities for the digital euro, and in September 2020, France announced the launch of CBDC based on the Tezos blockchain.[citation needed]

Spain[edit]

In Spain, there is no specific virtual currencies' legislation, except for the law approved in July 2021 on preventing and fighting tax evasion.[37]

Public opinion[edit]

The ECB issued a report on the findings of a three-month study of EU residents on the digital euro on April 14, 2021: Only 13% of EU residents are ready to utilize the digital euro, while 53% prefer cash payments, 34% prefer a mixed method, and 53% prefer a hybrid strategy.[38]

References[edit]

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  2. "EBA Opinion on 'virtual currencies'" (PDF). Archived (PDF) from the original on 2020-02-05.
  3. "Virtual currency schemes – a further analysis" (PDF). Archived (PDF) from the original on 2015-03-02.
  4. "Report on Distributed Ledger Technology Applied to Securities Markets". www.esma.europa.eu. Retrieved 2021-11-01.
  5. "ESMA highlights ICO risks for investors and firms". www.esma.europa.eu. Retrieved 2021-11-01.
  6. "REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on Markets in Crypto-assets, and amending Directive (EU) 2019/1937". eur-lex.europa.eu. Archived from the original on 2020-10-06. Retrieved 2021-11-01.
  7. "Virtual currencies and central banks monetary policy: challenges ahead" (PDF). Archived (PDF) from the original on 2018-07-10.
  8. "Virtual Currencies" (PDF). Archived (PDF) from the original on 2019-06-24.
  9. "Crypto-asset markets: Potential channels for future financial stability implications" (PDF). Archived (PDF) from the original on 2018-10-24.
  10. Cœuré, Benoît (2019-07-18). "Update from the Chair of the G7 working group on stablecoins". {{cite journal}}: Cite journal requires |journal= (help)
  11. FINMA, Eidgenössische Finanzmarktaufsicht. "FINMA publishes 'stable coin' guidelines". Eidgenössische Finanzmarktaufsicht FINMA. Retrieved 2021-11-01.
  12. "Occasional Paper Series: In search for stability in crypto-assets: are stablecoins the solution?" (PDF). Archived (PDF) from the original on 2019-08-29.
  13. "Digital Finance Package: Commission sets out new, ambitious approach to encourage responsible innovation to benefit consumers and businesses". Archived from the original on 2020-09-24.
  14. "Occasional Paper Series Stablecoins: Implications for monetary policy, financial stability, market infrastructure and payments, and banking supervision in the euro area" (PDF). Archived (PDF) from the original on 2020-09-24.
  15. "Procedure file" (PDF). Archived (PDF) from the original on 2021-01-12.
  16. "Proposal for a Regulation of the European Parliament and of the Council" (PDF). Archived (PDF) from the original on 2021-05-12.
  17. "European central bank officially announces 2-year-investigation to develop digital euro".{{cite web}}: CS1 maint: url-status (link)
  18. Jones, Huw (2021-07-20). "EU to tighten rules on cryptoasset transfers". Reuters. Retrieved 2021-11-01.
  19. Bateman, Tom (2021-07-21). "The EU is making Bitcoin traceable, closing crypto loophole". euronews. Retrieved 2021-11-01.
  20. "ESMA Report on Trends, Risks and Vulnerabilities" (PDF). Archived (PDF) from the original on 2021-09-01.
  21. Bateman, Tom (2021-09-29). "'Whales' make Europe the world's new cryptocurrency capital". euronews. Retrieved 2021-12-06.
  22. "DeFi makes Western Europe the world's largest 'crypto economy'". finance.yahoo.com. Retrieved 2021-12-06.
  23. Kissler, Michael (July 2020). "Guidance on crypto assets and crypto custody under the recent amendment to the KWG". Corporate Finance. Retrieved 21 March 2022.
  24. "Germany to Allow Institutional Funds to Hold up to 20% in Crypto". Bloomberg.com. 2021-07-30. Retrieved 2021-11-02.
  25. "Germany: Electronic Securities Act Enters into Force". Library of Congress, Washington, D.C. 20540 USA. Retrieved 2021-11-02.
  26. "Crypto Regulations in the UK". ComplyAdvantage. Retrieved 2021-11-02.
  27. "Central bank digital currencies". www.bankofengland.co.uk. Retrieved 2021-11-02.
  28. "Blockchain & Cryptocurrency Laws and Regulations | United Kingdom | GLI". GLI - Global Legal Insights - International legal business solutions. Retrieved 2021-12-08.
  29. Moon, M. (11 March 2022). "UK's financial regulator orders shutdown of all Bitcoin ATMs". Engadget. Retrieved 11 March 2022.
  30. Titcomb, James (11 March 2022). "Bitcoin cashpoints forced to shut down after being declared illegal". The Telegraph. Retrieved 11 March 2022.
  31. "Parliament passes law to legalize cryptocurrency in Ukraine - KyivPost - Ukraine's Global Voice". KyivPost. 2021-09-08. Retrieved 2021-11-02.
  32. "Dutch National Bank to lead way in digital euro development". Finextra Research. 2020-05-21. Retrieved 2021-11-02.
  33. "Blockchain & Cryptocurrency Laws and Regulations | Netherlands | GLI". GLI - Global Legal Insights - International legal business solutions. Retrieved 2021-12-08.
  34. "Money Laundering and Terrorist Financing Prevention Act – Riigi Teataja". www.riigiteataja.ee. Retrieved 2021-11-02.
  35. Pomerleau, Kyle (2015-11-06). "Estonia's Growth-Oriented Tax Code". Tax Foundation. Retrieved 2021-11-02.
  36. "Blockchain & Cryptocurrency Laws and Regulations | France | GLI". GLI - Global Legal Insights - International legal business solutions. Retrieved 2021-12-08.
  37. "Blockchain & Cryptocurrency Laws and Regulations | Spain | GLI". GLI - Global Legal Insights - International legal business solutions. Retrieved 2021-12-08.
  38. Reuters (2021-04-14). "Europeans want digital euro to be private, safe and cheap -ECB survey". Reuters. Retrieved 2021-11-02.
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