The European Commission is set to complete a regulatory initiative that will result in a clear definition of cryptocurrency under European law.

According to a report by IFC Review, the EU’s legislative body is approaching the final stages of the continent’s first digital currency framework.

In December 2019, the European Commission launched a public consultation to establish a European framework to address the issues raised by crypto-assets in the EU. This initiative is intended to clarify crypto’s legal standing and pave the way for innovation.

In a June speech, Commission Executive Vice President Valdis Dombrovskis said,

lack of legal certainty is often cited as the main barrier to developing a sound crypto-asset market in the EU.

He continued,

this [iniative] is a good chance for Europe to strengthen its international standing and become a global standard-setter, with European companies leading new technologies for digital finance.

In the past year, the commission produced what it refers to as a “non-paper,” which laid out the priorities of the proposed legislation. These are:

  • Provide a clear definition for all types of crypto assets
  • Update the “Markets In Financial Instruments Directive II” to include cryptocurrency
  • Create a comprehensive regulatory regime for blockchain-based platforms

A Patchwork of National Rules

The successful implementation of the law could provide an optimal legal environment for crypto firms to build their businesses and add to the European economy, the report noted. Bruno Schneider–Le Saout, chairman of the European Blocktech Federation, took things a step further, saying that the laws will be “historic” and,

support digital finance across the EU for many years to come.

The current state of crypto regulation in the EU could be described as a patchwork of national rules since EU regulation only applies to crypto-assets that fall within existing laws. This initiative is set to change all of that.

Aiming for a September rollout, the new legislation would replace existing national frameworks and provide the certainty needed for crypto assets to flourish. The laws are also notable because greater legal clarity would create a single market for crypto-assets in Europe.