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ColumnRegulation of digital assets: The EU is following suit

EU-wide regulations could in future exist for transactions with digital assets such as Bitcoin, Libra and EthertumImage by MichaelWuensch from Pixabay

Since the beginning of the year, business models have been regulated in Germany that deal with digital assets (crypto assets), such as bitcoins. 55 companies have given Bafin a declaration that they want to apply for a corresponding license for the crypto custody business by November 30, 2020.

Germany was and is a pioneer in Europe in terms of a secure legal framework for doing business with digital assets. However, calls for uniform European regulation have certainly been rightly made. Now the considerations at the European level to create an EU-wide regulatory concept for digital values ​​are beginning to solidify.

The purely digital representation of values ​​and rights on blockchain-based systems makes their creation and trading significantly more efficient. In particular, previous intermediaries such as banks or stock exchanges are only required to a limited extent in these digital transactions, or they have to significantly adapt their currently used infrastructure.

The EU Commission is currently preparing a regulation to answer various open questions about these digital assets. The aim is to provide legal certainty for companies, to protect investors and to prevent criminal acts such as money laundering and terrorist financing.

It is interesting here that the commission of the instrument makes use of an ordinance that is directly applicable in all EU member states and therefore leaves no room for implementation for the individual countries, unlike a directive. This serves to create an EU-wide identical legal framework for digital values ​​with an immediate implementation, but leaves the individual member states hardly any own design options.

This will also be exciting with regard to the German legal situation, since the German legislature decided at the beginning of the year to opt for a special national route. It remains to be seen how the new EU regulation for digital assets is compatible with the new German regulation of the crypto deposit business.

The newly planned regulation is primarily intended to cover digital assets that are not currently subject to specific regulation.

Issuers of digital assets

Digital securities (so-called security tokens) are often already covered by current regulations. Nevertheless, this area is also subject to new rules.

When issuing conventional assets (mostly shares and bonds), a prospectus currently has to be published that contains detailed information on the company and the relevant securities for investor information. The same should now apply to issuers of digital assets, who have to publish a standardized white paper with information on the digital assets offered, which is checked by the relevant national supervisory authority – in Germany the Bafin.

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