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ECB to warn eurozone countries over crypto regulation

This week, the European Central Bank warns eurozone countries about the dangers ahead of pending EU cryptocurrency rules by their regulators and introduces efficient surveillance of the rapidly evolving “Wild West” sector. Emphasize the difficulty of that.

The European Commission last week agreed on a radical package of standards for the crypto industry. However, central banks are concerned about the pesky patchwork of domestic regulations that manage duplication between banks and crypto companies before the package is fully implemented 18 months after the package is enacted next year. ..

Those familiar with the debate said it would increase the urgent need for “harmony” at the board of auditors on Tuesday.

“It’s very challenging,” said a national regulator in a eurozone country. “With mica [the EU’s digital regulation package] Eighteen months later, should I say, “Do whatever you want and there are no restrictions until it comes in,” or should you try to handle it well? ”

Germany was the most active in its efforts to tamper with digital currencies. Using the EU’s 2020 Anti-Money Laundering Directive, we have requested companies that hold and promote the trading of crypto assets on behalf of their clients to apply for a special license under the German Banking Act.

Other eurozone countries, such as the Netherlands, initially focused on registering anti-money laundering compliance, but emphasized that Russia’s invasion of Ukraine could use cryptography as an illegal means, such as avoiding sanctions. After that, some are considering broader measures. Consumer protection is also growing as the value of Bitcoin, the largest cryptocurrency, has plummeted by more than 70% from its peak.

“Authorities in countries under industry pressure need to come up with an answer,” said another country-level regulatory agency. Some banks want to clarify what they can do safely, some crypto companies are pushing for regulation to increase the credibility of the sector, while others are pushing for regulation. Insists on a lighter touch.

The ECB is concerned that banks may arbitrate crypto-related licenses pursued if the pan-European framework is not in place, a person familiar with the matter said. At tomorrow’s Board of Auditors, we will discuss the issue and the broader need for harmonization of the Eurozone approach with regulatory agencies in 19 Member States.

Andrea Enria, chairman of the ECB’s Bank Auditors, told the MEP in Brussels last week that the central bank was aware of the “differences in the state system over cryptography” and that fair competition was “important.” It will be. ” “We will focus on internal principles for smooth approval,” he said. [and] The licensing process for banks engaged in these areas. “

Interventions may face resistance from countries that want to move further on their own, but some countries are likely to support the ECB’s efforts. “Obviously, there are both harmony and timing issues. It is important to act immediately, as the full application of mica takes a considerable amount of time,” said a third national supervisor. Said the person who is doing.

Germany’s BaFin Watchdog said the regime was “almost equivalent” to the planned Mica Act. So far, we have granted four licenses to fintechs Coinbase Germany, Kapilendo Custodian, Tangany, and Upvest, and we have not granted licenses to traditional banks that require licenses even when expanding to cryptocurrency management. Hmm.

BaFin was under review for more than 20 license applications, but was rejected because the applicant failed to meet the Watchdog requirements covering everything from internal controls and IT platforms to money laundering prevention checks. He added that there was also.

Lawyers said it was “not uncommon” for Germany to make early regulatory moves “especially when there are consumer issues.” The ECB declined to comment on what was being discussed at the Board of Corporate Auditors.

Video: Highlights of the FT Cryptography and Digital Asset Summit | FT Live

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