The European Union’s financial services commissioner, Mairead McGuinness, has called for a new “global agreement on crypto” that would protect investors and limit the environmental impact of bitcoin mining. McGuinness, Member of the EU Commission and the EU’s most senior financial-services official, said she wanted to ensure “no product remains unregulated,” and warned of risks like sanctions evasion and financial instability, as she wrote in a contribution in the U.S. newspaper The Hill. Already, in February, finance ministers from major jurisdictions warned of the risk of a regulatory gap back.

In her contribution, McGuinness said the European Union and the United States could take a global leadership role in cryptocurrency regulation. “But to make rules on crypto fully effective, crypto requires global coordination and joint international principles”, according to McGuinness. Such a regulation should consider the benefits of the innovative technology while addressing the “significant risks”. The EU commissioner spoke about the volatility of certain assets, risks related to insider trading, the possible use of cryptocurrencies by Russia to circumvent sanctions, and environmental concerns.

The EU Commission had already presented a proposal for a Regulation on Markets in Crypto Assets (hereinafter “MiCA Regulation”) in September 2020, which is currently still in the legislative process. With the MiCA Regulation, the European Union wants to create a specific legal framework for crypto assets that would apply in all EU member states. According to McGuinness, the MiCA Regulation, which would be “in the final stages” of the law-making process, would essentially unify all rules for crypto service providers within the European Union. She also said U.S. President Joe Biden’s executive order of 9 March 2022 “charts the way for U.S. regulation of crypto assets” as it sets out a framework for U.S. agencies on how to deal with crypto-related policies and enforcement actions.

Alongside its work on MiCA, the European Commission has launched a consultation calling on financial services experts to give their views by 14 June 2022 on the possible introduction of a digital Euro. The European Central Bank has already started work on a prototype of a customer interface to the digital Euro on 29 April 2022. Since then, the ECB is now officially looking for partners to participate in the first tests of payment processing towards end customers. Since Thursday, payment service providers, banks and other relevant companies have been invited to apply for the test project.

It is therefore quite conceivable that an EU-wide regulation of crypto assets will come about in 2022 and that it could possibly even come into force at the end of the year or at the beginning of 2023.