EU has already approved the MiCA laws to regulate cryptocurrencies. This legislature will have a stronger impact on the stablecoin issuers in the sector. However, the members of Parliament in the EU are set to tighten the regulatory circle around blockchain entities more strictly.
A recent report from the Parliament has retained that the regulatory framework concerning digital currencies should align with international efforts. The research paper talks about the process of legislative arbitrage. At the same time, it has reflected the decentralized nature of cryptocurrencies.
This research opines that regulators hailing from different jurisdictions need to establish communication channels in all major regions. The report was compiled and published by the European Parliamentary Research Service (EPRS).
At the same time, the report also talked about the need for increasing efforts of collaborating with non-EU nations to ensure greater stability and development for the global digital currency sector.
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The report highlighted various channels in non-EU nations that pose a risk of financial stability as virtual currency businesses operating on an international scale may be able to deal with unexpected changes such as losses and volatility.
Borderless Crypto Companies Are More Sustainable
The analysts at the EU talked about the interconnected financial entities operating on a global scale. The report suggests that multinational cryptocurrency enterprises are subjected to regulatory arbitrage.
At the same time, the researchers also talked about the need for legislative amendments to address the decentralized aspects of blockchain and crypto entities. As a solution, legislators highlight the need for convergence among legislators hailing from important regions.
EU researchers described a regulatory system in USA regarding blockchain and virtual currency firms as fragmented. The legal analysts noted that there is a lack of federal legislative infrastructure in the crypto markets.
Therefore, regulatory divergence exists among different states. To this effect, every state has adopted an independent and autonomous regulatory stance towards virtual currencies that are present in their jurisdictions.
Regulators talked about New York State that issued BitLicense in 2015 mandated it for cryptocurrency exchanges. This license allowed the Department of Financial Services to collect more data using KYC compliance. Therefore, companies such as Kraken and ShapeShift opted out of the region.
EU Researchers View UK as the Global Cryptocurrency Hub
The report talked about UK with a view of its crypto-friendly stance. The report indicated that the region is now taking steps to become a crypto-friendly entity. The approach of regulators in UK is to direct their attention towards the most important areas of blockchain sectors such as stablecoins.
The region has refrained from adopting broad spectrum legislative regime directed towards the virtual currency industry. This report quoted another research that was conducted on behalf of the EU Parliament.
The referenced research paper talked about the potential communication between regulators hailing from UK and European Union. The main area of focus among researcher is directed at identification verification and regulatory clarity for virtual currencies.
At the same time, the paper also made note of new regulatory framework for crypto assets. These regulations emphasis compliance and declaration from stablecoin issuers for upholding anti-money laundering laws and ensure user data privacy.
The regulators have professed that they intend to tighten the regulatory framework for crypto firms while claiming that it can have an adverse impact on the sector.
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