The European Union plans to introduce a new legal framework for governing digital currency assets by 2024, in a bid to provide greater comfort for financial institutions in embracing distributed ledger technology. According to recently published documents, the new rules will aim to make it quicker and cheaper to facilitate cross-border payments using the blockchain technology and digital assets such as stablecoins. The announcement came as the European Commission prepares to set out its aims to move increasingly towards digital payments and finance.
78% of payments across the bloc are still transacting in cash.
The EU will bring forward draft laws to specify how existing rules apply to digital currency and blockchain and new legislation to cover any gaps left by current provisions. “By 2024, the EU should put in place a comprehensive framework enabling the uptake of distributed ledger technology (DLT) and crypto-assets in the financial sector. It should also address the risks associated with these technologies.” The EU aims to move toward digital payments, even though 78% of payments across the bloc are still transacting in cash.
“one-stop-shop licensing regime would be useful for digital finance businesses.”
The proposals come as lawmakers across the world face up to stablecoins such as Facebook’s Libra, or central bank digital currencies (CBDCs). Currently, under development by central banks across countries, CBDCs are expected to significantly disrupt existing global finance and payment systems in the coming years. According to the documents spelling out the plans, digital finance companies will be subject to the “same risk, same rules, same regulation” throughout the EU, to encourage the development of the fledgling European digital finance sector. Earlier, the European Central Bank president Christine Lagarde had said that the digital euro would not be a substitute for cash.