LEGAL BASIS OF THE EUROPEAN UNION INFLUENCE ON THE VIRTUAL ASSETS MARKET

Section "Law": Economic and Legal Comparative Research

Abstract

The article analyses the legal basis of the European Union (EU) influence on the virtual assets market. It was found that the current EU legislation on the virtual assets is still full of legal gaps and does not ensure proper market regulation because of the early stage of its development. The absence of a unanimous position regarding the virtual assets market regulation forces the EU Member States to apply their own, sometimes contradictory, approaches to market regulation. It disaffirms the basic principles of the European Singe Market functioning, in particular the free movement of goods and services. It was found that according to the current EU legislation, virtual assets may be qualified as payment tokens, investment tokens and utility tokens. Payment tokens may be considered as electronic money or funds. They are covered by the Directive (EU) 2009/110 and the Directive (EU) 2015/2366. For the purposes of anti-money laundering, virtual assets may also be classified as virtual currencies under the Directive (EU) 2018/843. Investment tokens may be qualified as transferable securities or other financial instruments and will therefore fall within the scope of the Directive (EU) 2014/65. Utility tokens are not covered by EU legislation for now. Instead of merely addressing issues and challenges of virtual assets, the European Commission took a broader approach to the future development of the virtual assets market in the EU, and adopted on 24.09.2020 a new Digital Finance Package. At the core of the mentioned Digital Finance Package are the legislative proposals for an EU regulatory framework on virtual assets. This includes the proposal for a Regulation on Markets in Crypto-assets (MiCA) which is designed to provide a comprehensive bespoke regulatory framework for virtual assets in the EU. It was substantiated that MiCA is an ambitious EU legislative project that responds to an urgent policy need. However, further substantial revision of its detailed provisions will be necessary to provide a comprehensive regulatory framework of the EU influence on the virtual assets market.


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Keywords

virtual asset, financial asset, cryptocurrency, virtual assets market, EU legislation

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16. Nabilou H., Prum A. Central Banks and Regulation of Cryptocurrencies. Review of Banking and Financial Law (Forthcoming), University of Luxembourg Law Working Paper. 2019. № 2019-014. 53 p. URL: https://ssrn.com/abstract=3421417 (дата звернення: 02.12.2020).

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18. Crosser N. Initial Coin Offerings as Investment Contracts: Are Blockchain Utility Tokens Securities? Kansas Law Review, Kansas Law Review Inc. 2018. Vol. 67 (2). P. 379-422. https://doi.org/10.17161/1808.27486

19. Lyandres E., Palazzo D., Rabetti D. Are Tokens Securities? An Anatomy of Initial Coin Offerings. May 2019. URL: http://52.76.234.106/media/abfer-events-2019/annual-conference/corporate-finance/30-P1-Are-Tokens-Securities.pdf (дата звернення: 02.12.2020).

20. Huang Sh. Regulation of Fintech Development: A Critical Analysis with a Case Study of Crypto Assets in the UK and EU: Doctoral dissertation, Bangor University, United Kingdom. 2020. URL: https://research.bangor.ac.uk/portal/files/28976743/Huang_PhD_2020.pdf (дата звернення: 02.12.2020).

21. Burilov V. Regulation of Crypto Tokens and Initial Coin Offerings in the EU: de lege lata and de lege ferenda. European Journal of Comparative Law and Governance. 2019. Vol 6 (2). P. 146-186. https://doi.org/10.1163/22134514-00602003

22. Digital Finance Package. European Commission. 24 September 2020. URL: https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en (дата звернення: 02.12.2020).

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Published
2021-04-15