European framework for crypto-assets: Adan shares its analysis and proposals

In a general position paper and two detailed analysis papers addressed to the European Commission, Adan presents its vision and proposals for improving the draft texts on emissions and market activities on crypto-assets.

In synthesis

• Adan welcomes the unprecedented approach adopted by the European Commission in its MiCA proposal, which establishes crypto-assets as an asset class in their own right and proposes a set of ad hoc requirements for players in these markets. The Association is also very positive about the creation of a transitional regime for the security token markets, with a view to adapting the current financial regulations and thus facilitating and consolidating their development.
• While these proposals are an encouraging first step in the construction of the European framework for crypto-actives, they nevertheless raise two major pitfalls. Firstly, if this were not the intention, the current wording of the texts could considerably hinder the emergence of the most innovative uses of decentralized finance (DeFi); secondly, the two texts largely favour the established players in the banking and financial center, to the detriment of new players whose potential for innovation is nevertheless fundamental to the realization of the European Union’s digital finance strategy. In the end, it is the competitiveness of the European crypto ecosystem that is under threat.
• Adan is therefore calling for sustained efforts in 2021 to improve existing proposals with a view to achieving truly appropriate, proportionate and technology-neutral regulation. The impact in terms of the competitiveness of the European industry must be taken into account in the debates of the European institutions, at a time when other jurisdictions are much more amenable to crypto innovation: the latest important announcement to date is that of the American banking regulator (the OCC) authorizing banks to use “public” blockchains and stablecoins in their payment activities.

Adan’s position, as well as its proposals for adjustments to the draft MiCA regulations and pilot scheme, are detailed in the document addressed to the European Commission and available on this page.

Adan’s work was conducted within the framework of the European Crypto Initiative (EUCI).

Background

On September 24, 2020, the Commission unveiled its digital finance strategy and the results of its reflections on the regulation of crypto-actives initiated since the launch of its consultation on the subject in December 2019. These results are materialized through two draft regulations: on the one hand, the MiCA (Markets in crypto-assets) proposal for the regulation of the primary and secondary markets for cryptomoney, utility tokens and stablecoins; on the other hand, the pilot scheme project for security token markets. At its October 7 webinar, the Association offered a presentation of these texts as well as a preliminary analysis of their issues.

Following their publication, the European Commission opened a public consultation period on these two texts, which ended on Monday, January 11, 2021. The Adan thus seized the opportunity of this consultation to share its vision.