The Association for Financial Markets in Europe (AFME) has called for greater supervisory convergence in European crypto-asset regulation as part of a new paper it has published.
In the paper, the association set out five recommendations to help encourage collaboration between regulators in Europe and work towards a common approach to the regulation and development of crypto assets in financial services.
The five recommendations include establishing a pan-European crypto-asset taxonomy, providing clear expectations for market participants on the process for issuing crypto assets, applying activities-based and technology agnostic regulation, applying existing regulation for regulated activities, with any necessary amendments if required and finally to prioritise convergence of regulatory frameworks with other global and regional initiatives.
The paper found that while there is some convergence on the methods used to classify different types of crypto-assets, there is a significant divergence in the methods used to regulate crypto-assets. This creates uncertainty for market participants, which limits innovation.
AFME explained that it is crucial that market participants and regulators collaborate further to better understand the market and end-user needs, the underlying technology, the benefits provided and the risks involved with crypto-asset activity in order to develop an appropriate response.
It suggested that this will support Europe becoming a leader in financial innovation and contribute to the European Commission’s ambition to make “Europe fit for the digital age”.
AFME said: “It is our aim that these recommendations will help protect the financial system, mitigate risks to end-users and encourage innovation and competition in relation to crypto-assets.”
“AFME and its members look forward to continuing to work with regulators and other market participants to achieve this aim.”
