A recent study commissioned by the European Parliament has suggested that all crypto assets should be considered as transferable securities by default.
The study’s authors proposed that an intermediary associated with a crypto asset could receive an exemption from a national competent authority (NCA) to avoid being classified as a security. NCAs are the regulatory authorities in EU member states.
Rationale for the Proposal
The researchers who conducted the study, hailing from universities across Europe and beyond, argued that such a move was necessary due to the rapid pace of innovation in the crypto industry. Despite the recent signing of EU MiCA regulations, the researchers expressed doubts over the feasibility of developing a comprehensive regulatory framework for crypto definitions at the EU level in a reasonable timeframe and with acceptable costs.
Shift in Regulatory Compliance Burden
The study also proposed a shift in the burden of regulatory compliance from national regulators to the entities that offer or facilitate trading of crypto assets. The authors of the report believe that this would streamline the regulatory process and hold those directly involved in crypto transactions accountable.
Comparison with US Regulations
The proposal is similar to the US approach, where the major regulatory agencies have suggested that only Bitcoin should be treated as a commodity for regulatory purposes. Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), has stated that most crypto tokens, with the exception of Bitcoin, should be classified as securities.
The study commissioned by the European Parliament has proposed that all crypto assets should be treated as transferable securities by default. The authors of the study believe that this approach is necessary due to the rapid pace of innovation in the crypto industry and that it would streamline the regulatory process. The study also suggests that the burden of regulatory compliance should shift to the entities that offer or facilitate trading of crypto assets. This proposed approach is similar to the established practice in the US, where only Bitcoin is treated as a commodity for regulatory purposes.