A report by the news agency Reuters has shown a shift in the vision of European Commission towards the cryptocurrencies. According to that, EU will seek to remain at the forefront of financial innovation. So a new legal framework for payments with digital assets and cryptocurrencies is expected to be presented in four years.
The new legal framework will clarify key issues for the crypto world. For instance, how current laws should interact with cryptocurrencies. Moreover, the European Commission proposes that new laws be drafted where essential. The economic crisis caused by the coronavirus pandemic has changed it in the European Commission. With up to 78% of payments still settled in cash, the institution will also seek to create an ecosystem that enables consumers to benefit from “instant” payments, as the European institution has stated:
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.
Impact on adoption for Ripple and Bitcoin
A new legal framework for cryptocurrencies such as that one proposed by the European Commission could benefit technology such as that developed by the payment solutions company Ripple. Through its On Demand Liquidity payment solution, Ripple can offer low-cost instant cross-border payment services with XRP.
Additionally, the framework could create more legitimacy to payments with cryptocurrencies such as Bitcoin, Ethereum and Litecoin. However, it depends on the legal framework presented by the European Commission. The report by Reuters says that the authorities are focusing on stablecoins after the hype around Facebook’s Libra. So the new legal framework could also give them greater priority or legitimacy for payments.
They will also work on facilitating inter-institutional cooperation by making it simpler for the financial sector to share information. In this way, the European Commission is hoping to create an ecosystem with many more services and of greater competition, but under one premise: “same risk, same rules, same regulation”. Therefore, consumers will receive greater incentives to access the services offered by the financial system.
However, one of the most important revelations of the report can be the “rapid” shift that the European Commission wants to make towards instant payments. By the end of 2021 this kind of payment is intended to be “the new normal”. This way, the Europeans will be less dependent on U.S.-based companies such as Visa and Mastercard, with regional alternatives. The European Commission added in the document to which Reuters has had access:
By 2024, the principle of passporting and a one-stop shop licensing should apply in all areas which hold strong potential for digital finance.