The cryptocurrency regulation is not always clear; in this article we sum up how the European Union and some of its countries are regulating the crypto assets and what are the entities responsible for controls.

Recently, we dealt with the delisting of many cryptocurrencies by the Poloniex Exchange, due to uncertain U.S. regulation (you can find more details here). Today we are trying to explain the situation of cryptocurrency regulation in Europe, according to the “Crypto-assets regulators directory” of the Financial Stability Board (FSB), an international body established on the occasion of the 2009 G-20 in order to monitor and make recommendations about the global financial system.

In relation to the European Union, the FSB has listed four regulators for crypto assets.

The first is the European Commission which is in charge of planning, preparing, and proposing legislation. The Board clarified that the commission can also make legislative proposals concerning cryptocurrency.

Another regulator is the European Banking Authority (EBA). Its functions include periodic analysis in relation to innovative products and services (including the crypto assets), in order to evaluate the impact on the financial system and the compliance with the EU laws.

The third regulator is the European Insurance and Occupational Pensions Authority that controls the developments of cryptocurrencies and Initial Coin Offerings regarding the insurance sector.

Lastly, the European Securities and Markets Authority (ESMA) is in charge of the stability of the EU’s financial system. At the beginning of 2019 the Authority published an advice for the European institutions, stating that crypto assets with certain characteristics must be considered financial instruments.

Many countries do charge capital gains tax on crypto-derived profits, while crypto exchanges are not currently regulated at a regional level.

German Authorities

In Germany, there are three regulators that oversee crypto assets. The first is the Federal Financial Supervisory Authority (Bafin), that is in charge of licensing and enforcing actions of crypto-related businesses. The second regulator is Deutsche Bundesbank that, in cooperation with Bafin, supervises regulated financial services activities, including cryptocurrencies. Finally, the Federal Ministry of Finance (Bundesministerium der Finanzen) is responsible for crypto-related legislation. In general, the government supports innovative technologies and promote a crypto-friendly tax regulation.

U.K. Authorities

In the United Kingdom, we can find three regulators. The HM Treasury develops policies and works with other regulators to ensure a robust and effective regulatory framework in the crypto-asset market. The Bank of England monitors the exposure of banks and insurance companies as regards crypto-assets and gives authorization to entities engaged in crypto activities. The last regulator for the U.K. is the Financial Conduct Authority which oversees all regulated firms and financial services activities. The U.K. government considers a security token any token that gives the holder the same rights and obligations that a specified investment does.

Swiss Authorities

In Switzerland, where the foundation that managed Lisk’s ICO is located, we can find four regulators. First of all, the State Secretariat for International Finance (SIF) that represents Switzerland’s interests in financial, monetary and tax matters. It is also in charge of the implementation of the financial market policy of the Federal Council. The second is Money Laundering Reporting Office Switzerland (MROS) that functions as a filtration point between financial intermediaries and law enforcement agencies. The Swiss National Bank (SNB) follows FinTech developments aiming at identifying the most important developments. Finally, the Swiss Financial Market Supervisory Authority (FINMA) has the intents of protecting creditors, investors, and insured persons as well as ensuring the proper functioning of the financial market. The country has adopted a remarkably progressive approach towards cryptocurrency regulations, defining which type of tokens are considered cryptocurrency, security or utility.

In conclusion, we can say that, in general, governments have the tendency to strict regulate those cryptocurrencies that can be considered as security. For this reason, Lisk is not involved in any form of regulation since it is considered as a utility token.

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