• A study commissioned by the European Parliament has proposed that all crypto assets should be treated as transferable securities by default.
• To avoid being classified as a security, entities behind crypto asset can get an exemption from a national competent authority.
• This proposal is largely in line with the established practice in the US, where Bitcoin is treated as a commodity and most other tokens are considered securities.
European Parliament Study Suggests All Crypto Assets Should Be Classified as Securities
The European Parliament has commissioned a study that suggests all crypto assets should be classified as transferable securities by default. To avoid this classification, entities behind the crypto asset may seek an exemption from a national competent authority (NCA). This proposal is largely in line with established practices in the US, where Bitcoin is treated as a commodity and most other tokens are considered securities.
Rapid Pace of Innovation
Due to the rapid pace of innovation in the crypto industry, developing a comprehensive regulatory framework for defining crypto at EU level within a reasonable timeframe and with acceptable costs appears to be difficult. Therefore, it has been proposed that the burden of compliance should shift from national regulators to those involved directly in offering or facilitating trading of crypto assets.
Major regulatory agencies in the US have suggested that only Bitcoin should be treated as a commodity for regulatory purposes while most other tokens should be classified as securities – this opinion was expressed by SEC Chair Gary Gensler among others.
MiCA Regulations Signed Into Law
This week saw MiCA regulations signed into law by EU authorities; however, it remains uncertain whether they will effectively address issues raised by rapid development of cryptocurrency technology.
In conclusion, it appears that classifying all crypto assets as transferable securities by default may be necessary due to lack of feasibility to develop comprehensive EU-level regulations quickly enough and cost-effectively enough. Furthermore, shifting responsibility for compliance away from national regulators may help streamline regulation process and hold those involved directly accountable for their activities concerning trading of cryptocurrencies.