Author(s): Jason Grant Allen and Rosa María Lastra
Date published: Nov 2019
SUERF Policy Note, Issue No 110
by Jason Grant Allen and Rosa María Lastra
JEL-codes: E5, E6, F5, K2, O3, G2.
Keywords: Cryptoasset regulation, Internet governance, Libra, capital markets regulation, monetary policy, payments system, money and finance, legal harmonisation.
While the size of the cryptoasset market remains below the threshold of systemic importance, the proposed launch of “Libra” makes it timely consider the next steps. We discuss four challenges to the governance of cryptoassets in Europe: (i) the “definition problem”, (ii) the “property problem” (iii) the “money problem”, and (iv) the “borders problem”. Our position is that a coordinated response at the European level is desirable. While no structural reform in the EU or Eurozone is necessarily required, some fine-tuning may help to minimise gaps in the complex, multi-level institutional design of the Eurosystem to respond adequately to changes in financial services – cryptoassets being only one instance of FinTech manifesting systemic implications. In any case, work at the Member State level is necessary, because some of the challenges posed by cryptoassets flow from national definitions of cryptoassets, the distribution of regulatory competences at the national level and, more importantly, from basic features of national legal systems, and the inherently “borderless” Internet-based financial services. A coordinated European response, we argue, will help to ensure the best possible global response to this phenomenon.
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