Europe Wants to Regulate Crypto and DeFi, Report Shows

The European Union and the European Commission have already dropped a few things about regulation of cryptocurrencies. There are no real rules specific to crypto yet, but they will probably appear soon. A new report from the European Commission clearly shows that the European government has an excellent picture of how the market works and how regulation would work exactly.

Gwell informed about Crypto and DeFi

It ‘European Financial Stability and Integration Review (EFSIR)‘ was published on April 4. The committee is very positive about both cryptocurrencies and decentralized finance (DeFi). The latter is described as the next step in the crypto asset ecosystem. It offers “Unstoppable access to financial services in a quasi-anonymous way through crypto-asset wallets.”

The somewhat anonymous aspects of DeFi mean that regulation should be based on the activity and not on the entity or person. Smart contracts are a replacement for regular third parties. That is why it is a good idea to apply regulation to the type of smart contract, writes the European Commission. Still, the team behind the DeFi protocol must also be involved. After all, people make the software for the protocol and you can legally oblige it to work with it.

pilot project monitoring crypto transactions

Furthermore, the report announces a pilot project for crypto before 2022. To be precise, it is about ‘embedded supervision’† In other words: monitoring transactions in an almost automated way. This is probably necessary in connection with the freedoms that DeFi offers. Without monitoring, transactions would be processed too quickly to effectively fight crime.

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The word cryptocurrency is hardly used anywhere except in the footnotes. Everywhere is ‘crypto asset’. This indicates that the committee is trying to remain legally correct and to keep the terms as broad as possible. Some crypto assets can be stocks or similar assets. That is, for example, what the lawsuit between the US SEC and crypto company Ripple is about. You can therefore expect that in the future you could also buy shares via DeFi, for example.

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