The cryptocurrency craze has been particularly intense in Europe. The region is home to some of the world’s biggest digital currency exchanges, including Bitfinex and Kraken. And Estonia, Switzerland, and Liechtenstein are among the European countries that have recently approved licenses for operators in the crypto space. Read on to learn more about the growth of crypto in Europe, including details on which countries have approved licenses and why this is significant.
EU Financial Services Supervisory Authority: Europe is Taking Crypto Seriously
The EU has taken a number of steps to regulate the digital currency market, including the creation of the European Financial Supervisory Authority (EFSMA). The EFSMA is a European Union agency that oversees EU financial regulatory policy. In early 2019, the EFSMA announced plans to develop a legal framework to govern the crypto market. These plans include assessing the risks associated with digital currencies, developing rules to address those risks, and publishing a whitepaper with recommendations to EU-level policymakers. The EFSMA’s announcement follows a recent trend of EU-level activity surrounding crypto regulation. Earlier this month, the European Commission, the EU’s governing body, hosted a roundtable with market leaders to discuss the state of the crypto industry. During the meeting, the EU Commission revealed that it is considering the creation of a “regulatory sandbox” for the crypto sector. A regulatory sandbox is an experimental regulatory environment designed to promote innovation and facilitate market growth.
Switzerland Has Been Approving a Lot of Crypto Licenses
Switzerland has been a hotbed of crypto activity for years. In August 2018, the nation’s Financial Market Supervisory Authority, FINMA, clarified its stance on digital currencies. According to the agency, crypto tokens, which typically represent a share of company equity, are not considered securities under Swiss law. In other words, crypto tokens are not subject to the same strict regulations as equities. Almost a year later, FINMA announced that it had granted a number of companies cryptocurrency licenses. The agency has since confirmed that it has continued this trend in 2019, granting five new cryptocurrency licenses in the first two months of the year alone. The licenses granted to date include approval for a crypto fund, an exchange, a broker, a wallet provider, and a representative of an ICO.
Estonia Is Also Viewing Crypto Licenses Favorably
Much like Switzerland, Estonia is a hub for crypto activity. The country is home to a number of blockchain startups, including Change, a peer-to-peer marketplace for insurance, and Tokenbox, a digital asset management platform. In February 2019, Estonia’s Financial Intelligence Unit (FIU) issued new guidelines for the regulation of digital currencies. The guidelines state that cryptocurrency exchanges are subject to the same regulatory requirements as traditional financial institutions. Crypto exchanges that want to operate in Estonia must therefore adhere to strict anti-money laundering and cybersecurity regulations. The FIU’s updated guidelines follow the country’s recent approval of a license for a crypto exchange. According to the exchange’s CEO, the license is valid in all EU member states. The license is notable because it is not a blockchain-focused license. Instead, it applies to cryptocurrency exchanges in general.
Malta Has Been Bullish on Digital Currency as Well
Malta, a Mediterranean island nation, has become known for its progressive approach to blockchain and crypto regulation. In July 2018, Malta’s parliament passed three bills pertaining to cryptocurrencies, the creation of a regulatory sandbox, and a research initiative to be funded by the European Commission. In January 2019, Malta’s financial watchdog, the Malta Financial Services Authority (MFSA), announced that it had granted a number of cryptocurrency licenses. According to the agency’s announcement, the licenses were granted to 13 companies, including crypto exchanges, ICO gateways, and crypto service providers. Later that month, Malta’s prime minister, Joseph Muscat, met with a number of top blockchain executives, including the co-founder of Ethereum, to discuss the future of the industry. Muscat has been bullish on crypto since the technology’s early days, and the meeting was significant because it involved a government leader meeting with a collection of industry executives.
Austria and Germany Are Expected to Be Next in Line for Licenses
Austria and Germany are two major European economies that are expected to issue cryptocurrency licenses in the near future. It is unclear when these licenses will be granted, but Austria’s financial regulator has said it is working on regulations for the sector. And the German financial authority, BaFin, is also expected to start granting licenses in the near future. Increasing numbers of European countries approving crypto licenses is a positive sign for the industry as a whole. It shows that the EU is taking digital currencies seriously, and that it is willing to adapt the regulatory environment to accommodate the technology.
Bottom line
Crypto is booming in Europe. This is evidenced by the EU’s growing regulatory activity and the various EU countries that have approved crypto licenses. The EU’s increased involvement in the crypto sector also suggests that digital currencies are here to stay, and that government leaders recognize their potential.