Group items tagged

The European Union (EU) Industry, Research and Energy Committee approved a proposed update to the European Digital Identity Framework that will enable the issuance and usage of the smartphone-based EU's European Digital Identity Wallet (eID). It would allow holders to identify and authenticate themselves online (via a European digital identity wallet) without having to resort to commercial providers. It would also give users full control of their data and let them decide what information to share and with whom.

The National Bank of Poland (NBP) has reportedly admitted that it has been researching central bank digital currency (CBDC) since 2017, but so far is not seeing a clear case for moving ahead with issuance. In May 2021 the NBP published a special CBDC report which concluded that there are no sufficient reasons for the rapid introduction of the digital zloty. It found that there were no consumer or merchant payment media requirements that can't be satisfied by existing payment services. The central bank's restraint was also related to a lack of legal grounds to issue CBDC. https://www.nbp.pl/systemplatniczy/cbdc/raport-cbdc.pdf

The EU Digital Finance Platform is a new website designed to build dialogue between innovative financial firms and supervisors. The initiative was announced in the Digital Finance Strategy of September 2020. Its main objectives are to overcome fragmentation and support the scaling up of digital financial services across the Single Market. This will foster innovation in finance and holds great potential for businesses and citizens who stand to benefit from new, effective products and services.

The European Union (EU) launched its Digital Finance Platform, a new website designed to build dialogue between innovative financial firms and supervisors. Its main objectives are to overcome fragmentation and support the scaling up of digital financial services across the Single Market. It will initially consist of an Observatory offering interactive features such as a Fintech Map, events and a section where users will be able to share relevant research material, and a Gateway which will act as a single access point to supervisors, with information about national innovation hubs, regulatory sandboxes and licensing requirements.

Members of the European Parliament from the Committee on Economic and Monetary Affairs and the Committee on Civil Liberties adopted their position on draft legislation strengthening European Union rules against money laundering and terrorist financing. Under the new requirements, all transfers of crypto-assets would have to include information on the source of the asset and its beneficiary, information that is to be made available to the competent authorities. The rules would also cover transactions from unhosted wallets.

European lawmakers have adopted legislation imposing a €1,000 cap on anonymous cryptocurrency transactions, as part of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) package. The draft bill also seeks to cap anonymous cash transactions above €7,000 when it is not possible to identify the sender. The bill had an overwhelming majority of 99 votes in favor, eight against and six abstentions. The European parliament will start negotiations on the final text of the AML/CFT package after a plenary session in April. https://www.europarl.europa.eu/news/en/press-room/20230327IPR78511/new-eu-measures-against-money-laundering-and-terrorist-financing

The Digital Euro Association (DEA) published a summary of the key takeaways from its Digital Euro Conference held on March 31, 2023, that brought together experts, policymakers, and industry leaders in a hybrid format. Both on-site and remote participants engaged in insightful discussions, presentations, and panel sessions centered around central bank digital currencies (CBDCs), stablecoins, and tokenized commercial bank deposits.

Sweden's Riksbank published an update on its technical work aimed at examining how an e-krona could work if a decision is taken in the future to issue central bank digital currency (CBDC). The focus during Phase 3 has been to examine how the Riksbank could interact with other actors in the payment market to give the general public access to, and the possibility to pay with, an e-krona, how conditional payments can be made and whether a digital central bank currency can simplify cross-border payments.

"By limiting large cash payments, the EU will make it harder for criminals to launder dirty money. An EU-wide maximum limit of €10.000 is set for cash payments. Member states will have the flexibility to impose a lower maximum limit if they wish."

Cash is still the most frequently used means of payment at the point of sale, but its share is declining according to the latest study on the payment attitudes of consumers in the euro area, published by the European Central Bank (ECB). Cash was used for 59% of point-of-sale transactions in 2022, down from 72% in 2019. It is the means of payment most often used for small-value payments in stores and for person-to-person transactions. A majority (60%) also consider it important to have cash as a payment option. Consumers perceive cash as helpful to remain aware of their expenditures, to protect their privacy and to allow transactions to be settled immediately.

The Banque de France (BdF) published a consultative paper on potential regulatory responses to decentralized finance (DeFi). "The regulation of disintermediated finance cannot simply replicate the systems that currently govern traditional finance... [as one option] players exercising effective control over sensitive services could be required to incorporate, becoming subject to supervision." The paper also floated the idea  of strengthening the security of smart contracts using a certification mechanism covering code security and governance. In addition, it proposed rules should also stop intermediaries selling highly leveraged products to retail investors.

The European Parliament voted in the new Markets in Crypto-Assets Act (MiCA) crypto licensing regime, and the Transfer of Funds "travel rule" regulations. It now needs approval from the European Council before becoming effective regulation, after which the main provisions start to apply just over 12 months after publication in the EU's official journal, likely in June. For example, on that timeline, the specific provisions of MiCA related to stablecoins will come into force in July 2024, while others, including those on crypto-asset service providers, will apply in January 2025. MiCA will allow companies to operate throughout the entire EU crypto market with a MiCA license granted in one country.

The European Banking Authority (EBA) has initiated a consultation on the guidelines for the orderly redemption of asset-referenced or e-money tokens in the event that the issuer fails to fulfil its obligations under the Markets in Crypto assets Regulation (MiCAR). For example, the draft guideline calls for the clarification of the main principles governing the redemption and distribution plan, such as the equitable treatment of token holders, and describe the main steps for the orderly and timely implementation of the plan.

The European Securities and Market Authority (ESMA) published some of the final rules relating to the Markets in Crypto-Assets Regulation (MiCA) crypto asset regulations. These include the information required for licensing crypto-asset service providers (CASPs) and how regulated institutions provide notification that they plan to offer CASP services. Separately, ESMA published a consultation on a third package of rules covering topics such as detecting market abuse and client rights. https://www.esma.europa.eu/press-news/esma-news/esma-launches-third-consultation-under-mica https://www.esma.europa.eu/press-news/esma-news/esma-finalises-first-rules-crypto-asset-service-providers

The majority of the European Union (EU) Parliament's lead committees have approved new legislative to ban anonymous crypto payments. This comprehensive package of anti-money laundering measures also includes significant restrictions on cash transactions. Anonymous cash payments in commercial transactions are limited to amounts under €3,000, with a complete prohibition on cash transactions exceeding €10,000 in business contexts. Also any crypto transaction via "hosted wallets" (i.e., managed by service providers) must be fully traceable, eliminating anonymity for even the smallest transactions.

LCH SA has received the required regulatory approval from the French national competent authorities (ACPR, Banque de France and AMF) and European supervisory authorities (EMIR College, ESMA) to clear cash-settled Bitcoin index futures and options contracts. LCH SA will provide clearing services through its new dedicated service, LCH DigitalAssetClear, for these contracts traded on the UK FCA regulated digital asset derivatives trading venue, GFO-X. LCH DigitalAssetClear is underpinned by a segregated default fund, tailored risk management model and dedicated set of clearing rules. LCH SA plans to launch the clearing service later in 2024.

The European Securities and Markets Authority (ESMA) published an analysis of crypto-asset market structures, secondary trading and their relevance for the European Union. It finds that crypto-asset market capitalizations and trading volumes are significantly concentrated in a few assets, with a high reliance on the US dollar and the South Korean won as market on- and off-ramps. Only around 20% to 30% of transactions involve fiat currencies and most transactions occur within the system itself. Also, trading volumes are highly concentrated in a few crypto exchanges, with the largest exchange (Binance) accounting for almost half of global trading volumes.

The European Blockchain Sandbox announced the 20 participants in its second cohort. https://ec.europa.eu/digital-building-blocks/sites/display/EBSISANDCOLLAB/European+Blockchain+Sandbox+announces+the+selected+projects+for+the+second+cohort