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The Association for Financial Markets in Europe (AFME) has called upon European regulators to collaborate and work towards a common approach for the regulation of crypto-assets in the common currency area.
AFME, which represents leading global and European banks and other significant capital market players, on Wednesday, published a new paper outlining five key recommendations for “supervisory convergence on the regulation of crypto-assets in Europe.”
The paper, developed by AFME’s Digital Assets Task Force, provides an overview of the crypto-asset taxonomies and regulatory approaches in use by a sample of National Competent Authorities across Europe. It also highlights the areas where it found divergence in regulation.
Furthermore, the task force found that while there is some convergence on the methods used for classifying different types of crypto-assets, there is a significant divergence in the methods used to regulate crypto-assets. This, in turn, creates uncertainty for market participants, which limits innovation.
The five key recommendations made by the task force include establishing a pan-European crypto-asset taxonomy; providing clear expectations for market participants regarding the process for issuing crypto-assets; applying activities based and technology agnostic regulation; applying existing regulation for regulated activities, with any necessary amendments, if required; and prioritising convergence of regulatory frameworks with other global and regional initiatives.
James Kemp, Managing Director, Head of Technology and Operations at AFME, said that wholesale markets could significantly benefit from the rapid rise in the development of crypto-assets.
“However, to realise those benefits, it is increasingly important that crypto-asset regulation is coordinated at the regional and global level to foster innovation, while promoting financial stability and ensuring a level playing field. This should start with forming a common understanding of the various crypto-asset terms and activities in financial services,” Kemp added.
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