On 16 June 2021, the European Parliament Committee on Economic and Monetary Affairs (ECON) held a meeting in which it discussed the main legislative proposals under the European Commission (Commission) Digital Finance Strategy. During the discussion, ECON members considered the draft reports on the following legislative proposals:

This was the first ECON meeting after shadow rapporteurs from the other political groups presented their draft amendments to the three proposals.  Therefore, the majority of the discussion evolved around these counter-amendments. The rapporteurs presented their draft reports in the ECON on 14 April 2021.

Please find an overview of the discussions on the different legislative files below.

  1. Proposal for a Regulation on Markets in Crypto-Assets

Stefan Berger (EPP, DE) presented his draft report, stating that it was important for him that MiCA would be a forward-looking draft regulation. Other priorities for Berger included the question of sovereignty of financial policy in the EU, and the protection of financial stability and currency sovereignty. In particular, Berger argued that the European Central Bank (ECB) should have a central role in the authorisation of stablecoins. While Berger wanted to have an ECON vote on the draft report before the summer recess starting in mid-July, he accepted that, considering the substantial number of amendments and counter-amendments, an ECON vote in September would be more feasible.

Shadow rapporteur Eero Heinaluoma (Socialists and Democrats (S&D), FI) told ECON that he would like MiCA to be a tool that would better protect investors against fraud. In addition, third-country based providers should be subject to rules when marketing their crypto-assets and/or tokens to EU consumers. Like Berger, Heinaluoma wanted a prominent role for the ECB in the authorisation process for crypto-assets and asset-referenced tokens. Finally, Heinaluoma considered banning the authorisation of crypto-assets whose creation or usage would generate excessive energy usage. Ondrej Kovarik (RE, CZ) argued that the scope of MiCA should be clarified to ensure that there is a clear split between products falling under MiCA and MiFID II financial instruments. Sven Giegold (Greens, DE) was of the view that a financial product cannot exist without supervision and regulation. For crypto-assets, Giegold wanted to have authorisation and supervision at the EU level, with strong powers for the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA). Shadow rapporteur Bogdan Rzońca (ECR, PL) considered consumer protection and the fight against money laundering as the main aims of MiCA and wanted more coherence between MiCA and other EU financial services regulation. Rzońca did not want to transfer more powers to the ECB, especially in the context of asset-referenced tokens that reference non-euro currencies. Finally, Chris MacManus (The Left, IE) wanted to ensure that innovation in the crypto-asset industry does not override regulation, transparency and consumer rights.

      2. Proposal for a Regulation establishing a pilot regime for market infrastructures based on distributed ledger technology

Rapporteur Johan van Overtveldt (ECR, BE) started the debate by discussing the proposed amendments in his draft report on the DLTR. Van Overtveldt based his proposed amendments to the Commission’s proposal on three pillars:

  • Scope: Van Overtveldt proposed to keep the aggregate threshold but lower the proposed maximum market capitalisation of the issuer of DLT transferable securities from EUR 500 million to less than EURO 50 million for both shares and bonds. Furthermore, sovereign bonds and exchange-traded funds would be admitted to trading or be recorded on a distributed ledger.
  • Level playing field: the rapporteur proposed to ensure that a DLT Multilateral Trading Facility (MTF) doing settlement services should follow the same requirements as a DLT Securities Settlement System (DLT SSS), and vice versa, and proposed to create a new type of market infrastructure, a ”DLT Trading and Settlement System” for operators wishing to combine both trading and post-trading roles.
  • Early exit assessment: While the Commission has proposed that the DLT pilot regime should be in place for five years before it is evaluated, Van Overtveldt proposed to include a second review after three years following the start of the pilot regime.

Van Overtveldt stated that he did not consider that the views of the amendments filed by the shadow rapporteurs were far apart from his own proposed amendments and hoped for a swift adoption of the draft report in the ECON, preferably before mid-July.

Following the presentation by Van Overtveldt, shadow rapporteur Jessica Polfjärd (EPP, SE) took the floor by stating that her proposed amendments would improve the DLTR by making it more technology neutral. Eva Kaili (S&D, GR) asked for a cross-reference to MiCA with regard to the definition of “distributed ledger technology” to ensure coherence. Kaili also hoped for a swift compromise. Stephanie Yon-Courtin (RE, FR) emphasised the need for financial stability, even if the DLTR only establishes a pilot regime. In addition, Yon-Courtin hoped that the DLTR will not only benefit large public entities, but also small and medium-sized enterprises. The DLTR should also be open to new entrants in the market, and not be restricted to already existing large players. Sven Giegold (Greens, DE) agreed with Van Overtveldt on widening the DLTR’s scope to include more financial products, but warned against possible regulatory arbitrage. For Giegold, ESMA should have a supervisory role in the DLTR, considering its pooled expertise in the field. Lastly, Chris MacManus (The Left, IE) wanted to narrow the proposed timeframe of the pilot regime from five to three years, as he does not want the DLTR to become a blueprint for permanent exemptions. Lessons learned from the pilot regime should be incorporated in the existing legislation.

  1. Proposal for a Regulation on Digital Operational Resilience for Financial Services

Rapporteur Billy Kelleher (RE, IE) started the discussion on DORA by stating that it has received over 900 proposed amendments. Considering the high number of amendments, Kelleher nevertheless felt that he could reach a compromise text with the shadow rapporteurs by September.

Shadow rapporteur Frances Fitzgerald (EPP, IE) stated that the DORA proposal should focus on the core operational functions of financial institutions and be objective towards operational risks. The risk management framework of in-scope entities should take a risk-based approach and consider the size, complexity and risk profile of the entity. Fitzgerald agreed with Kelleher that critical third-country ICT services providers should have a legal entity within the EU. Alfred Sant (S&D, MT) asked for a balance in DORA between prescriptive rules and flexibility. In addition, he asked for a better streamlining of DORA with other legislation, such as the Directive on security of network and information systems ((EU 2016/1148) (NIS Directive) and the General Data Protection Regulation ((EU) 2016/679). He also asked for extending the date of application of DORA to 36 months after its entry into force following publication in the EU Official Journal. Mikuláš Peksa (Greens, CZ) discussed the oversight framework proposed in DORA, stating that it there should be an EU-level Joint Oversight Body responsible for the supervision of critical ICT third-party service providers. Peksa also proposed a central EU hub for indecent reporting. Closing the debate, Bogdan Rzońca (ECR, PL) asked for a more flexible approach taken in DORA, to ensure that in-scope entities can create tailor-made solutions. Rzońca was also in favour of exempting insurance intermediation companies and statutory auditors from the scope of DORA.