Investigation into Crypto Assets by EU Commission

By Valentina Za

MILAN (Reuters) – The European Commission is examining how EU regulations on crypto assets safeguard investors’ redemption rights concerning identical e-money tokens (EMTs). These tokens are pegged to the value of a single official currency.

In 2022, France’s Autorité de contrôle prudentiel et de résolution (ACPR), the banking and insurance supervisor, requested the European Banking Authority (EBA) to explore the possibility of having fully fungible EMTs issued by entities, both within and outside the EU, that are subject to different regulatory frameworks.

The EBA referred this inquiry to the EU Commission as it involves the interpretation of EU law.

In 2023, the EU implemented comprehensive rules for crypto assets, known as MiCAR, mandating that EMT issuers obtain supervisory clearance and maintain reserves, including bank deposits, for tokens sold to ensure repayment to investors when needed.

Meanwhile, in the United States, President Donald Trump committed to reducing regulatory hurdles for cryptocurrency companies. The U.S. Securities and Exchange Commission has recently formed a task force to develop new regulations.

Some issuers operate both inside and outside the EU. For example, Circle, which issues the US dollar-pegged ‘USDC’ stablecoin, functions in the EU as Circle SAS. The USDC from Circle SAS is fully interchangeable with those from Circle LLC.

Furthermore, the ACPR inquired if, for identical EMT issuance within and outside the EU, only EU customers might be allowed to present redemption requests to the EU-based entity.

ACPR refrained from providing additional comments.

Andrea Resti, a finance professor at Bocconi University in Milan, noted, “The MiCA regulation already incorporates considerable flexibility to promote innovation. Interpreting the rules in ways that are not explicitly stated could lead to risks and undermine the effectiveness of the new regulations.”