Valdis Dombrovskis, the EU's Executive Vice-President, used a speech at the Digital Finance Outreach 2020 Closing conference to lay out the bloc's approach to regulating digital assets. The European C
Valdis Dombrovskis, the EU's Executive Vice-President, used a speech at the Digital Finance Outreach 2020 Closing conference to lay out the bloc's approach to regulating digital assets. The European Commission views crypto with clear eyes: there are benefits for consumers and businesses, but the current framework creates confusion about what rules apply to what.
"Some crypto-assets fall under existing EU rules. Many do not. But they present familiar issues of consumer protection, market integrity, and equal conditions for competition," Dombrovskis said.
The Commission plans to introduce a flexible pilot scheme before year's end. The model balances two competing demands. Regulators want room for companies to experiment and build new products, but they also want close supervision to manage risk. The Commission will create custom rules for stablecoins and other digital assets that don't fit existing categories, tailoring each to address its specific dangers and what users and investors need to know.
That regulatory flexibility will scale with the risks each asset class presents. Higher risk means tighter rules.
The push for new standards reflects a broader concern about digital finance infrastructure. Dombrovskis stressed that users need to trust a digital system before they'll use it. Trust comes from operational resilience, from a system's ability to resist attacks and failures. Demand for digital financial services grew during the COVID-19 crisis. Cybercriminals saw a bigger target.
The European Systemic Risk Board is working on regulations that would require financial firms to meet standards for system resilience. Part of that effort involves pushing institutions to replace legacy IT systems that lack adequate security or performance.
The EU's broader agenda connects these moves: getting financial institutions to compete in a single market, building a sector that runs on data and insights, spurring innovation with new rules, while avoiding requirements that favor any particular technology.
Dombrovskis closed with a simple statement of stakes: "Ladies and gentlemen, the digital age is firmly upon us. Europe's financial sector needs it to move forward."
