Brussels accepts to fight cryptocurrency fraud

The European Union is seeking to limit activities related to cryptocurrency. This week, the European Council and the Parliament reached a provisional agreement to create the first regulation in the area. It will increase consumer protection against potential fraud and investment in crypto assets. The rule must be approved by the European Parliament as well as the Twenty-seven.

The goal is to end the lack of transparency in the digital currency markets. This will require a clear legal framework to be established and the foundations laid for any other countries or institutions who want to legislate in this field. The EU regulation requires that cryptocurrency service providers identify the beneficiary and issuer of every transaction. This is a requirement that applies to all conventional operations and will increase the traceability of money.

This new rule will be applicable to all movements, no matter how large or small. These standards will be more stringent for investors, as the Twenty-Seven intend to establish stronger protections for consumers against market manipulations and insider trading.

The community authorities will also establish additional controls for providers of this type service from third countries that are considered high-risk by the EU in the area of money laundering. The authorization of the national authorities will be required for cryptocurrency operators who wish to enter the European market. These providers will need to submit their responses to the European Securities Market Authority once they have obtained this "European passport".

This body will also supervise the cryptocurrencies that are stable in this sector, which are cryptocurrencies that have a lower volatility. This regulation will require these currency issuers to maintain liquidity in order to protect consumers.

Mairead McGuinness (Commissioner for Financial Stability), stressed that regulations will be effective in combating money laundering and financing terrorist activities. "This regulation will provide greater legal certainty for the cryptoactive market. She hoped that other jurisdictions would follow her lead and international cooperation in this area will continue, she said.

European law will require operators to disclose their environmental footprint. The European Commission will collect this information and prepare a report about the environmental impact of crypto-assets -which consume a lot more energy - in order to establish sustainability standards for the sector.