In an effort to fix a big problem in the European Union’s (EU) rules about crypto-assets, Andrea Enria, the Chief Supervisor of the European Central Bank (ECB), is urgently asking for action. This problem is stopping the regulatory frameworks from working well and could cause risks to the financial system. Enria says it’s important to have clear rules for companies that provide crypto-asset services in order to protect the financial system from risks.
Enria wants to close the legal problem with cryptocurrencies because it’s important to keep the banking sector stable. The current problem lets banks get around some rules about cryptocurrencies, and this could have bad effects if the money suddenly gets taken out. Enria warns about the possible problems and says it’s important to fix this quickly.
To make the rules stronger, the ECB wants to supervise the companies that provide crypto-asset services. This will give the ECB a good understanding of how much money banks have in cryptocurrencies. Claudia Buch will take over from Enria and keep making the rules stronger.
The Basel Committee on Banking Supervision (BCBS) is leading the way in making global standards for how banks handle cryptocurrencies. These standards should become part of EU law by January 1, 2025. The aim is to reduce risks and protect the financial system. Good supervision and rules are important for keeping the banking sector stable.
Banks should be careful and not rely only on money from cryptocurrencies, especially if it changes a lot. Crypto-asset companies should work with different banks to make the financial system more stable and safe.
There’s an urgent need to fix the legal problem in the EU rules because it’s important to have clear rules for the crypto-asset market. By fixing this problem, the ECB wants to make traditional banks more confident about working with regulated and safe crypto-assets.
As the digital money market grows and changes, the rules need to keep up. The ECB is trying to fix the legal problem with cryptocurrencies to make sure there are good rules that protect investors and the financial system.
In summary, closing the legal problem in the EU rules about cryptocurrencies is a big step towards stronger rules for crypto-asset companies. The ECB wants them to work with different banks and have good supervision to make the financial system more stable and safe. As the rules get better, it’s important for everyone to work together to make a transparent and well-regulated crypto-asset market.
By fixing these legal problems, the ECB is taking an important step to make the crypto-asset industry more trusted and protect the banking sector. With more people using digital money around the world, it’s important for regulators to make strong rules that protect investors and reduce risks. Closing these problems will not only make things clearer and more transparent, but also let traditional banks confidently work with regulated and safe crypto-assets.