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The Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system, has listed four regulators for crypto assets in the European Union (EU):

  1. European Commission; which is responsible for planning, preparing, and proposing legislation, including any on cryptocurrency if it “decides to propose such legislation,” the Board clarified. The Commission also monitors the effectiveness of financial sector reforms and responds to emerging financial stability risks.
  2. European Banking Authority (EBA); whose functions include carrying out “regular horizon-scans in relation to innovative products and services,” including those related to crypto assets, “from the perspectives of monitoring the impact on the financial system, the suitability of the regulatory perimeter under EU law.” 
  3. European Insurance and Occupational Pensions Authority; which monitors the developments of cryptocurrencies and initial coin offerings (ICOs) in the insurance sector.
  4. European Securities and Markets Authority (ESMA); is responsible for safeguarding the stability of the EU’s financial system. Regarding crypto assets, ESMA published advice to European institutions in January 2019 acknowledging that crypto assets with certain characteristics are financial instruments and should be supervised as such.

Regional Regulations:
The regulations of Crypto currency in EU are not just monitored by a uniform body but also monitored by country specific regulating bodies that look into its compliance based on the needs and effects of it on their economy. The major economies like France, Germany, Italy, Spain, and the UK have established their own agencies and regulatory bodies to monitor the crypto industry.



The PACTE draft Bill (Action Plan for Business Growth and Transformation) was adopted at its final reading in the French National Assembly on 11 April 2019. Once enacted, the law will establish a framework for fundraising via the issuance of virtual tokens (Initial Coin Offering – ICO) and digital assets services providers (DASP), as well as strengthens the powers of France’s Financial Markets Authority, the Autorité des marchés financiers (AMF) as the regulator of the crypto industry.The bill includes both optional and mandatory licensing, and also specifies the types of funds that can invest in crypto assets.  

An optional License for ICOs and Crypto Service providers:
Until now, fundraising through the issuance of tokens not classified as financial instruments was not subject to any specific rules. If it is enacted, the PACTE Law will provide a legal response to this issue. The law will enable project initiators who so wish to submit their information document to the Autorité des Marchés Financiers for an optional visa that will be issued on condition that they meet certain requirements.
The visa remains optional and the raising of funds without AMF visa will continue to be legal in France. However, issuers who have not received the AMF visa will not be able to use general solicitation. The AMF will publish the list of ICOs that have received its visa.

The Pacte bill provides the option for digital asset service providers to be licensed and placed under the supervision of the AMF. These include crypto custodial services, brokers and dealers offering the “purchase or sale of digital assets against legal tender or other digital assets,” and crypto exchange operators. In addition, crypto services such as remittance, asset management, advisory, and underwriting are also included. 

Mandatory licensing:
Service providers who wish to provide digital assets custody services to third parties or to purchase/sell digital assets in exchange for legal tender are subject to mandatory registration with the AMF.

Widened Powers of AMF:
The AMF will have the powers to oversee the ICOs that have received its visa and to supervise licensed service providers. In the event of non-compliance with the rules, the AMF may hand down sanctions against ICO issuers and licensed service providers.
ICOs that do not have a visa and unlicensed service providers will be prohibited from solicitation, patronage and sponsorship activities. Advertising will remain authorised.
Consequently, the AMF may publish a “blacklist” of ICOs and digital assets services providers who do not comply with the regulations. Finally, it may block access to fraudulent websites offering services in digital assets.

The French Finance Minister Bruno Le Maire was quoted as saying:
I will propose to my European partners that we set up a single regulatory framework on crypto-assets inspired by the French experience … Our model is the right one.”
When In most of the world, cryptocurrencies are still either totally unregulated or banned. The French government’s new cryptocurrency bill – the first of its kind adopted by a major nation – will allow firms that want to issue new cryptocurrencies or trade existing ones to apply for certification.



Legal tender
The German government’s views and approach to cryptocurrencies are ambivalent. In Germany, cryptocurrency is not just a product, but a legal tender, with an order by the Federal Ministry of Finance that allows for making purchases with digital currencies without taxation, since virtual currency is considered an equivalent to fiat. However, it cannot be expressly regarded as a legal tender but merely substitute currencies.
German law does not provide for a general prohibition relating to the issuing, mining nor possession of nor trading in cryptocurrencies. However, there may be regulatory licensing and prospectus requirement as applicable. 

The Federal Financial Supervisory Authority (BaFin) is responsible for licensing and enforcement actions of crypto-related businesses. Bafin is also responsible for the “Prudential oversight on licensed institutes including those offering crypto-asset related services,” the authorization of crypto derivatives, AML/CFT supervision, as well as market integrity and oversight concerning crypto assets, related offerings, and crypto trading platforms.
From a legal perspective, cryptocurrencies were classified by BaFin in 2013 as financial instruments that fall in the sub-category of so called “units of account”, which are a special national category of financial instruments not based on EU law. That being said, tokens which exhibit features that go beyond serving as a mere payment substitute i.e. security, asset and utility tokens must be classified on a case by case basis. They may qualify as securities or units or shares in investment funds.
In order to fully satisfy any legal requirements, the market participants must give careful consideration to whether the tokens constitute a regulated instrument, for instance, a financial instrument or a security.
To be deemed a security within MiFID II (The Markets in Financial Instruments Directive ), for example, a token must meet criteria such as transferability, negotiability on markets or trading platforms and also embody shareholder rights or creditor claims.
On the other hand, “if the token is in fact based on a unit in a collective investment undertaking, it also constitutes a financial instrument” within the meaning of the MiFID II. If a token meets the criteria for a financial instrument or security, it could fall under supervisory requirements being applied to a market participant.

In cooperation with Bafin, the central bank i.e., Deutsche Bundesbank.supervises regulated financial services activities, including those related to crypto tokens at financial institutions. The bank also assesses the implications of crypto assets from the perspectives of payment system oversight and monetary policy.

Cryptocurrencies as a means of payment or the mere acceptance of it as a substitute currency is not a regulated activity. Certain commercial dealings in cryptocurrencies and other types of token can trigger licensing requirements under financial supervisory law pursuant to the German Banking Act.


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Law Graduate from Bangalore, India. Currently involved in research of global crypto regulations and compliance.

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