on the crypto
A study by the European Parliamentary Research Service published on September 18 said that the digitization of resources could benefit the overall economy of the European Union as digital finance continues to play an increasingly important role in the block's financial services.
Regulating cryptocurrencies to grow the European economy
The study focused on why the EU should invest in the crypto assets sector, highlighting how the ongoing expansion of the crypto ecosystem is changing preferences and uses among investors and consumers.
According to the report, expanding the crypto-asset market would facilitate digital financial innovation, increase highly skilled employment and foster more innovation and investment, which would open up more opportunities for businesses and startups.
“… From a macroeconomic perspective, opening the doors to digital assets could also benefit the economy as a whole. The overall expansion of the crypto-asset market, which as mentioned above would go hand in hand with digital financial innovation, could significantly increase professional employment, innovation and investment, ”notes the report.
The research also highlighted the importance of establishing a "framework" for cryptocurrency markets that takes into account the risks that innovators and investors could face, such as the risks of market fragmentation and financial instability.
It also addressed the importance of determining what constitutes a crypto asset and what rules apply to it. “Some crypto assets fall under existing EU legislation, but most don't.
This can expose investors and consumers to substantial risks, ”the report states. "Given the complexity and rapidly changing nature of crypto assets, existing legislation needs to be continuously evaluated to see if it can be effectively applied to this type of asset or if changes or guidance are needed."
A difficult challenge due to the "high level of uncertainty and complexity"
The report says this "high level of uncertainty and complexity" in a rapidly changing landscape can pose a challenge to lawmakers when it comes to regulating crypto assets.
The research highlighted three "pivotal" areas that will be critical for the future development of cryptocurrencies and digital finance in the EU block: (1) creating a framework to define crypto assets, (2) cyber dependency and (3) processing data and strategy to promote the adoption of crypto assets.
The European Union will establish new regulations for cryptocurrencies within the next four years
The European Commission had previously stated that it will introduce new rules within four years to make cross-border payments faster and cheaper using blockchain and crypto-assets.
The Commission is working to define its strategy to encourage greater use of digital finance at a time when 78% of all payments in the euro area are made in cash.
The commission also wants a quick switch to "instant" payments. Indeed, during the months of the pandemic, EU countries highlighted the growing role of digital payments.
