Regulation of Cryptoassets in the EU

Cryptocurrencies are increasingly being targeted by financial regulators in the EU & Great Britain. Hence, if you’re planning to register a crypto company in the EU (or already have one), the recent changes in the regulation of crypto activities in Great Britain & EU should be something you’re particularly interested in. To help you stay updated on the latest developments in this area, we’ve come with a brief overview.

Great Britain

Based on the 2018 report released by an FCA-created working group, the FCA has taken steps to ensure direct regulation of digital assets in England. The focus of the report was  cryptoassets themselves (including their definition) & DLT technology they’re based on.

Key events:

• holding a consultation on how the current regulatory regime is applicable to certain types of cryptoassets;
• publishing a mission statement detailing FCA findings;
• releasing a working group’s statement on cryptoassets & DLT.

Those planning to start crypto activities in Great Britain should keep in mind that an FCA-created working group has concluded that cryptoassets can qualify as property as per the country’s current legislation. As regards smart contracts, they can be considered legally binding if they ensure compliance with contract law’s general principles.

Europe: Regulation of Virtual Assets

If starting a crypto business in the EU is on top of your priority list now, you’d be probably interested in the recommendations the EBA & ESMA have come up with. The former focuses on AML practices & considers applicability of monetary rules to cryptoassets. The latter considers the possibility of applying regulations governing financial instruments in Europe. 

France & Malta have specific legislation in place regulating cryptoasset transactions. Luxembourg came up with its own rules authorizing storage of security tokens on special platforms; its government is now considering introducing the concept of a “token” into the country’s legislation.

Poland put in place regulations allowing JSCs to store shares in DLT software. Finland and Croatia implemented 5AMLD which enables them to expand financial regulation of cryptoassets by using a single consolidated act.

Conclusion

If you are planning to register a cryptocurrency exchange in the EU, you should keep in mind the "investment activities" concept adhered to by its members. You should also be mindful of the fact that previously adopted rules weren't designed with technological innovations like cryptoassets in mind. This fact alone can make launching & implementing cryptoasset projects in the EU a big challenge.