The European Central Bank has built the basis for the factors it would take into account when unifying the licensing requirements for crypto assets in Europe.
The licensing of credit institutions is necessary for the public regulation and oversight of the European financial system, according to the August 17 official post. The public’s understanding that only authorized institutions are working within the financial system is crucial for maintaining public confidence in it.
The ECB to roll out new regulations
The European Bank highlighted that as the institution in charge of banking authorizations in European banking supervision, it is its responsibility to ensure that banks participate in the burgeoning crypto-asset markets responsibly and safely while adhering to the necessary rules.
The ECB asserts that as a result; it collaborates closely with the national supervisors to guarantee a uniform strategy and high standards across nations.
With several regulatory initiatives at the European and global levels now completed, the ECB is searching for a practical way to harmonize the regulatory framework governing crypto asset activities and services in the EU.
According to them, this will establish a more general regulatory framework that will permit crypto activities and specify how banks should manage the risks they create, bringing crypto assets under regulation.
The ECB would pay particular attention to how the proposed activity matches the overall activity and risk profile of the institution; whether the institution’s policies and procedures are adequate to identify and assess risks unique to crypto-assets; and fit and proper assessment.
The bank also acknowledged that certain types of risk, starting with operational and cyber risks, are brought to the fore by crypto assets and that the ECB is working to evaluate these risks.
Examples of such risks include the theft of cryptographic keys or the compromise of login information, as well as dangers associated with the use of specialized technology and outsourcing contracts with outside providers.