- Deregulated tech risks financial crisis
- World needs similar rules on crypto
The European Commission’s proposal for crypto-assets and its new anti-money laundering (AML) legislation will go hand in hand, according to a senior official from Berlaymont.
“These two proposals will be two sides of the same coin, so that operators in this space, whether that is issuers, service providers, wallet providers, or trading venues are subject to the same set of rules throughout the EU,” said Jan Ceyssens, the commission’s digital finance head while speaking at a Q&A for the Anti-Financial Crime Fintech Summit.
The Markets in Crypto Assets (MiCA) proposal was introduced by the European Commission in September 2020 and is now subject to amendments from both members of the European Parliament and representatives from the 27 EU member states.
On the other hand, the commission is planning to launch its new AML proposal in July.
The commitment to align policy on these matters will likely impress members of the European Parliament, with one having told VIXIO’s webinar last month that there needed to be coherence or amendments to the MiCA draft to include an AML component.
“In terms of addressing new challenges and risks, in the upcoming package on AML rules, we will complement and further elaborate on the rules relating to virtual assets and crypto-assets,” Ceyssens confirmed, stating that they will complement not just MiCA but the Financial Action Task Force’s (FATF) guidance.
“A number of member states have already gone ahead and we are trying to make sure that there is a common, comprehensive framework on AML in place across the EU,” he added.
Germany is the most recent member state to have committed to introducing FATF rules regarding crypto. This has spurred concern among the crypto community in the EU, who believe that FATF’s travel rule could breach data protection regulations if applied to virtual asset service providers.
Addressing the matter of technological innovations in the financial market, speakers on a late panel warned that a lack of regulation could trigger negative consequences.
“The European Union is cognisant that the future relies a lot on technological developments, but we cannot have the sort of technological development that is unregulated,” said Nico Di Gabriele, lead supervisor for the European Central Bank.
The 2007 financial crisis taught central banks one important lesson, he suggested. “When legislation is altered, when legislation is relaxed, supervisory authorities and market participant rules miss the understanding of the bigger picture and risks start building up without consciousness of them,” he said.
Technology today is important and can improve the lives of citizens, but can also be damaging, he reasoned.
While discussing the MiCA package, his co-panellist speculated that other jurisdictions may introduce similar rules in the coming years.
“We’re looking to do similar things here in the region,” said Lori Baker, vice president at the Dubai International Financial Centre. “It’s going to be necessary, and you can’t go on without any support or regulation.”
On the international stage, there needs to be collaboration, she continued. “Really, we all need to look at a global kind of package.”
Digital finance will not be confined to one single region, Baker noted. “How can it be? That’s the whole point, we’re moving beyond different currencies in the sense that this country has the euro and that country has the dollar.”
For this reason, there will need to be consistency in regulation, she summarised.
This was also a discussion point at the G7 last week, where finance ministers and central banks agreed on principles for central bank digital currencies and stablecoins.