Crypto UK formed a working group to respond to the European Commission’s comprehensive public consultation of more than 150 questions covering topics including taxonomy, a bespoke regime, security tokens, stablecoins, market participants and market integrity. Ian Taylor, Chair of Crypto UK, described the content of the consultation and the nonprofit trade organization’s response.
(40:52) “It did seem that the Commission was seeking clarity on taxonomy…Most folks in the community would agree that we’ve gotten to a place now where there are three key classifications, which you can agree on the terminology — a payment token, utility token and security token. That’s generally what everyone believes is the right classification…From Crypto UK, we were clear on where we stand with the taxonomy. What they seemed to be seeking some clarity around was security tokens and how security tokens would fit into existing securities law, for example MiFID II, and whether those tokens, the security tokens, would constitute e-money. And we believe as a membership body that crypto assets generally do not fall in an existing regulatory perimeters. Therefore we advocated within this consultation for a new classification to be created as opposed to a potential awkward attempt being made by the folks at the European Parliament to retrofit crypto assets into existing frameworks where an actual fit may not exist…We broadly believe that making sub-classifications based on a particular token’s economic purpose and function is more beneficial and more relevant as technology features develop.”
The Commision was also seeking clarity on the bespoke regime idea, in response to which Ian Taylor said:
(44:08) “The bespoke regime…was an interesting area as to how the European Commission are thinking about this and their question gave us an insight as to the seriousness of this. So our response was generally around security tokens pretty much will fit into the existing perimeter. However when we’re looking at other tokens, whether it’s payment or utility tokens, this is this is where we think the bespoke regime for crypto assets is relevant…We would like to see a proportionate response that would not stifle innovation…The other major sections after that were around stablecoins, which one would assume has been a hot topic after Libra in the last 12 months, and then market participants – there’s a big section on trading exchanges…and then finally market integrity, which I personally believe is very important for this industry to develop.”
It’s going to be a while before the Commission issues its response.