On 9 January 2019, the European Banking Authority (EBA) published a report containing the results of its assessment of the applicability and suitability of EU law to crypto-assets.
The report states that based on the analysis conducted by the EBA, crypto-assets typically fall outside the scope of EU financial services legislation and specific services relating to crypto-asset custodian wallet provision and crypto-asset trading platforms do not constitute regulated activities under EU financial services law. Moreover, divergent approaches to the regulation of these activities are emerging across the EU. These factors give rise to potential issues, including regarding consumer protection, operational resilience, market integrity and the level playing field.
The EBA sets out in the report advice to the European Commission regarding the need for a comprehensive cost/benefit analysis to determine what, if any, action is required at the EU level at this stage to address these issues, specifically with regard to the opportunities and risks presented by crypto-asset activities and new technologies that may entail the use of crypto-assets. The EBA also advises the Commission to have regard to the latest recommendations and any further standards or guidance issued by the Financial Action Task Force (FATF) and to take steps where possible to promote consistency in the accounting treatment of crypto-assets.
The EBA also identifies in this report a number of steps that it will take in 2019 to enhance monitoring in relation to financial institutions’ crypto-asset activities, including with regard to consumer-facing disclosure practices.
The EBA states that it will keep under review the need for any further actions within the scope of its statutory competence and stands ready to support the Commission in relation to any further analysis of issues arising in relation to crypto-assets.
In the meantime the EBA will take forward in 2019 the certain action (described in paragraph 73 of the report) that includes developing a common monitoring template which competent authorities can issue to institutions, payment institutions and electronic money institutions (and, as appropriate, other financial institutions) to monitor the level and type of crypto-asset activity underway.