Draft rules on the supervision, consumer protection and environmental sustainability of cryptocurrencies, including cryptocurrencies such as bitcoin, were agreed by members of the Economic and Monetary Affairs Committee, which adopted, by 31 votes in favor, 4 against and 23 abstentions, its negotiating position on new rules for crypto assets aimed at enhancing user confidence and supporting the development of digital services and alternative means of payment.
The main provisions
The key provisions agreed by MEPs for those who issue and trade crypto assets cover transparency, disclosure, authorization and supervision of transactions.
Consumers will be better informed about risks, costs and fees. In addition, the legal framework supports market integrity and financial stability by regulating public offerings of crypto assets.
Finally, the agreed text includes measures against market manipulation and to prevent money laundering, terrorist financing and other criminal activities.
To reduce the high carbon footprint of cryptocurrencies, particularly the mechanisms used to validate transactions, MEPs ask the Commission to submit to MEPs a legislative proposal to include in the EU’s classification of sustainable activities any cryptocurrency mining activities that contribute significantly to climate change by 1 January 2025.
MEPs point out that other industries (e.g. the video game and entertainment industry, data centres) also consume energy resources that are not climate-friendly.
They ask the Commission to work on legislation that addresses these issues in different sectors.
MEPs want the European Securities and Markets Authority (ESMA) to supervise the issuance of tokens referring to assets, while the European Banking Authority (EBA) will be responsible for supervising e-money tokens.
Cryptocurrencies Are not Guaranteed by a Central bank
Cryptocurrencies are neither issued nor guaranteed by a central bank or public authority. They are currently outside the scope of EU legislation.
This creates risks for consumer protection and financial stability and could lead to market manipulation and financial crime.
The draft law differentiates between crypto assets in general, asset reference assets (ARTs), also called “stable currencies”, and e-money tokens used primarily for payments.
The mechanisms used to validate transactions in crypto assets have a significant environmental impact, particularly for proof-of-work mechanisms, which require a lot of energy and result in a high carbon footprint and generate e-waste.