Since September, the EU Commission’s proposals on legal foundations for the crypto industry have been on the table. According to independent consultant Tom Lyons, the EU plans – with the exception of Stablecoins – are more constructive than negative.
If government agencies present drafts for a regulation of Bitcoin and Co., the reactions from the Crypto industry already come automatically: More laws would stifle innovations and drive crypto companies away. This communicative ritual can currently be observed again, because in September the EU Commission presented an extensive legal framework for digital asset classes. Tom Lyons is now also taking the floor in the discussion about the concrete design of the rules. In a guest article for Decrypt, Lyons writes that the EU Commission is often misunderstood. It stands against Krypto substantially more openly than plakativ maintains. Lyons is however not impartial, but advises the commission in things Krypto. Previously, Lyons worked for the block chain company ConsenSys in Switzerland as a senior executive.
Crypto Rules in the EU – Pros and Cons
Lyons recalls how the crypto industry initially howled up during the introduction of new EU rules against money laundering. But which followed since then, in reality risen conversions in the trade with Bitcoin and CO. are also in the European Union. Banks dare themselves into the new business field, investors welcome clearly formulated legal security. Leading crypto stock exchanges such as Binance or Coinbase developed for instance in Germany branches, the migration of the crypto industry from Germany and the European Union painted to the wall did not take place.
A similar scenario expects Lyons now with clear, EU-wide guidelines for the crypto trade. According to his forecast, these will provide the guidelines for at least a decade. Their major advantage would be to create a uniform legal framework in the EU. Lyons cites discussions with industry associations from France, Gibraltar and Brussels itself as the basis for its adoption. During these talks, top representatives have signaled their agreement in principle to EU rules. Even to his own surprise, the crypto-lobbyists did not appear to be a priori dismissive of EU directives for their industry.
But Lyons identified two important exceptions in his mood report: it remains partly unclear what the EU understands by crypto-currencies as an asset class and whether it also wants to regulate block chains. A registration obligation could mean an insurmountable hurdle for smaller start-ups. On the other hand, however, the EU Commission wants to allow a sandbox for crypto start-ups in which they can try out new ideas without having to obtain a license. This is welcomed in principle and could be a solution to ensure a balance between innovation and the need for customer security.
Lyons sees Stablecoins as the most controversial point in the EU Commission’s initiative. In 2020 alone, for example, the volume for DeFi exploded worldwide from USD 600 million to USD 12 billion at the end of October. Stablecoins play a fundamental role in lending transactions in the DeFi division. If the EU is serious about banning interest on Stablecoins and at the same time demanding registration with the deposit of Fiat reserves, this would come close to a de facto ban. At least that is how Lyons interprets the statements of the industry associations and also indicates that he can understand these fears.
Conclusion: Interference in EU legislation for crypto required
Crypto will not disappear from the EU, Lyons said. On the contrary: Its discussions also with European Union officials show that these see an innovative growth market in the crypto industry and strive to get consumer protection and industrial promotion under a hat. Which concerns Stablecoins as standard with the Kryptohandel, Lyons recommends: Uses the possibility of contacting industry federations and European Union delegates and of justifying, why the system crypto currencies and in particular DeFi without Stablecoins comes into the wavering.
Meanwhile, we maintain: Not everything that comes from Brussels is bad. The EU Commission’s plans for the crypto market are already well advanced, but not yet firmly established. The fundamental recognition of the crypto industry as a legal business field is more than a symbolic act, but reflects the increasing importance of crypto currencies for citizens as a young asset class. These wish legal security just like the providers of services.
The topic Stablecoins is so controversial because monetary policy sees in it a risk for their currency sovereignty. The ECB can already imagine an official E-Euro. However, it is not to be expected that such a CBDC could quickly replace Tether (USDT), USD Coin (USDC) and other Stablecoins. Hopes are therefore currently focused on the EU Commission making practical improvements to its planned regulations based on arguments from the crypto-community regarding Stablecoins. This would be also for both sides a proof in the direction “growing up” of the crypto industry.
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