London, Friday 20 March 2020 – The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has responded to the European Commission’s consultation paper on the EU regulatory framework for crypto assets.
The WFE response can be summarised as follows:
- The WFE believes there could be value in adopting a single EU classification which covers both digital assets and crypto assets, as a subcategory. Such a categorisation should, however, be mindful of any forthcoming international classification and have the ability to absorb and adopt it. It should take the form of guidance, to provide clarity, which also enables individual jurisdictions the right level of autonomy to properly and appropriately safeguard and manage the requirements of their local market structure, whilst also enabling regulatory deference in the regulation of digital and crypto assets in third country jurisdictions.
- The WFE supports the creation of a classification of crypto assets at the EU level, noting that providing clarity around classification would help to build consensus and create harmony within the member states of the EU, as well as with other jurisdictions globally. The WFE advises that the definitions be based on the value of the assets represented, and should avoid overly detailed ‘technical’ definitions.
- The WFE continues to highlight the importance of distinguishing between so-called ‘crypto asset exchanges’ and the regulated, secure and lit markets that established exchanges provide.
- With regards to Distributed Ledger Technology (DLT), the WFE argues that, whilst its members are exploring the feasibility of DLT to provide enhanced, safer and more efficient marketplaces - for example, by reducing operating costs and speeding up settlement - policy makers should be mindful of the purpose and functions undertaken by exchanges and CCPs, and that DLT cannot replace the core functions performed by those market infrastructures.
Nandini Sukumar, Chief Executive Officer, WFE said: “We believe that fast-moving technological advances in the European financial market infrastructure space call for a coordinated approach, which fosters innovation, while preserving financial stability and market integrity. This approach also needs to operate in an internationally applicable manner, as well as allowing for individual jurisdictions to apply their own, specific and appropriate regulatory requirements to the regulation of crypto assets, in line with the needs of local markets. We are therefore pleased to see the European Commission’s work towards building a regulatory framework for crypto assets, which will go towards ensuring this nascent market is properly regulated.”
Please click here to read the full WFE response.
The WFE operates a FinTech Working Group (FTWG). Set up in 2017, the WFE's FTWG comprises senior technology and innovation representatives from 25 exchanges and CCPs globally. The purpose of the FTWG is to enable members to develop comprehensive and coherent industry policy positions to help shape regulatory thinking in this space, while also sharing information and best practice about new developments.