The European Central Bank, or ECB, laid the groundwork for the criteria it would consider when harmonizing licensing requirements for cryptocurrencies in Europe.

In a statement on Wednesday, the ECB’s banking supervision division said it would take steps to regulate digital assets given “national frameworks governing crypto assets diverge quite a bit” and apparently different harmonization approaches following the approval of the Stock Markets. Crypto Assets, or MiCA and the Basel Committee on Banking Supervision issue guidelines for banks’ exposure to cryptocurrencies. The ECB said it would apply the criteria of the Capital Requirements Directive, in place since 2013, to assess license applications for cryptocurrency-related activities and services.

Specifically, the central bank will consider crypto companies’ business models, internal governance, and “fit and proper” assessments that apply to licensing other companies. In addition, the ECB said it will rely on national anti-money laundering, or AML, authorities and Financial Intelligence Units in the respective countries to provide the data needed to assess potential risks.

“The greater the complexity or relevance of the cryptocurrency business, the higher the level of knowledge and experience in the field of cryptocurrencies should be,” the ECB said. “Senior managers or board members with relevant IT knowledge and chief risk officers with strong experience in this area are important safeguards.”

According to the ECB, there is “work in progress” to look at the role that cryptocurrencies can play in Europe, which “will continue to be an area of ​​interest for European banking supervision for years to come.” With the approval of the MiCA, global regulators can begin to standardize the rules for crypto service providers within the European Union.

Related: ECB chief calls for separate framework to regulate crypto lending

On August 2, the ECB published the results of a study that identified a central bank digital currency as the best option for cross-border payments over Bitcoin (BTC) and other options. Officials previously pointed to Terra’s crash as a possible example of a stablecoin threatening the financial system, recommending oversight and regulatory measures to reduce risk.



This post European Central Bank Addresses Guidance on Licensing Digital Assets

was published first on https://cointelegraph.com/news/european-central-bank-addresses-guidance-on-licensing-of-digital-assets

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