Speech by Executive Vice-President Valdis Dombrovskis at the Digital Finance Outreach 2020 Closing conference

Crypto-assets and distributed ledger technology will be our first test case.

They have the potential to bring benefits to consumers, businesses as well as market participants.

Cheaper and faster payments, for example – or new funding sources for smaller businesses.

Lack of legal certainty is often cited as the main barrier to developing a sound crypto-asset market in the EU.

We intend to change that – and here, I believe that Europe is in a position to lead the way on regulation.

For this, we need a common approach: one that supports and stimulates innovation.

We plan to present legislation in this area later in the year.

Some crypto-assets fall under existing EU rules.

Many do not. But they present familiar issues of consumer protection, market integrity and equal conditions for competition. This exposes consumers to substantial risks and fragmented national rules in the single market.

For crypto-assets covered by the EU rules, there are several areas where we should adjust those rules to make sure that they remain fit for purpose.

Since distributed ledger technology evolves constantly, we will propose a pilot scheme to give some regulatory flexibility for experimentation – but well framed and under close supervisory oversight.

For those assets which are not covered, we will create a bespoke regime and a passport for markets in crypto-assets. The aim is to make sure that risks are addressed, and that investors and users have a clear understanding of them.

Overall, our approach will be proportionate and relate to the level of risk. That means lighter rules for less risky projects.

However, with crypto-assets like stablecoins – whose value is pegged to a currency like the euro or to a basket of currencies – we need to distinguish between ‘global stablecoins’ and those created by smaller start-ups and FinTech innovators.

If they reach a global scale, stablecoins are likely to raise additional challenges in terms of financial stability and monetary policy.

In these cases, because of their potentially systemic role, our rules will be stronger.