ECB brings crypto assets and digital wallets under extended framework
The European Central Bank has released an extended regulatory framework that will cover digital assets like cryptos as well as digital wallets as it prepares to bring in regulations in tune with the times that we are in.
The bulk of the regulatory framework in most countries was made a few years back but over the last couple of years, we have seen some major changes in the way the payments and financial industry operate. We have seen the proliferation of a lot of digital wallets as many new and old companies shift to the digital age and look to make payments easier for their users. We have also seen the growth of the crypto industry and the digital assets and they have also been expanding across the world without much regulatory oversight. Now they are in a position to challenge and change the existing financial ecosystem and this is why the regulators have woken up and started to take notice and realize that they would need to reign in the industry and update their regulatory framework to take care of the changing scenario.
“The retail payments ecosystem is evolving fast owing to innovation and technological change. This calls for a forward-looking approach in overseeing digital payment solutions,” said ECB Executive Board member Fabio Panetta. “The PISA framework will include digital payment tokens such as stablecoins, alongside traditional payment instruments and schemes we have gained experience in over the years. Internationally coordinated action will also have to be stepped up to cope with the challenges posed by global digital payment solutions and stablecoins.”
It is expected that the ECB would also be bringing out a specific framework to cover the crypto assets but that is likely to come in a few months later as it is still in the works but the current framework is expected to complement it. The ECB would hope that this would help in regulating the crypto industry even more bringing in more transparency and also making it easier for large investors to take a plunge into this space with more assurance which will create a win-win situation for all. Those companies that would be regulated by the ECB and brought under this framework are likely to be given a period of 1 year to fall in line with the regulations.