The European Union (EU) is set to introduce a new legal framework for governing digital currency assets by 2024, in a bid to provide greater comfort for financial institutions in embracing distributed ledger technology.
According to recently published documents, the new rules will aim to make it both quicker and cheaper to facilitate cross-border payments, with the help of blockchain technology and digital assets such as stablecoins.
The documents come as the European Commission prepares to set out its aims to move increasingly towards digital payments and finance, despite 78% of payments across the bloc still transacting in cash.
The EU will bring forward draft laws to specify how existing rules apply to digital currency and blockchain, as well as fresh legislation to cover any gaps left by current provisions.
“By 2024, the EU should put in place a comprehensive framework enabling the uptake of distributed ledger technology (DLT) and crypto-assets in the financial sector. It should also address the risks associated with these technologies.”
The document goes on to say that a new “one-stop shop” licensing regime would be useful for digital finance businesses, in order to operate seamlessly throughout the bloc.
“By 2024, the principle of passporting and a one-stop shop licensing should apply in all areas which hold strong potential for digital finance.”
The proposals come as lawmakers across the world face up to stablec coins such as Facebook’s Libra, or central bank digital currencies.
Currently under development by central banks around the world, CBDCs are expected to significantly disrupt existing global finance and payments systems in the coming years.
According to the documents spelling out the plans, digital finance companies will be subject to the “same risk, same rules, same regulation” throughout the EU, in order to encourage the development of the fledgling European digital finance sector.