Europe’s Shift in Crypto Regulation: Tokenizing Traditional Financial Assets
Europe’s next big crypto train will not be Mica 2.0. Instead, the European Commission will reveal proposals in December that aim to bring traditional financial assets to blockchain. This shift in focus is expected to have a significant impact on the crypto industry, as it moves away from solely regulating crypto emissions and service providers.
The upcoming SIU proposals from the Commission are expected to include measures to token shares, bonds, and derivatives. The EU DLT pilot regime, introduced in March 2023, will be upgraded as the first step towards the broader introduction of tokenized financial instruments in Europe. This move is seen as a significant step forward in integrating the fragmented capital markets of Europe and increasing cross-border investments.
Peter Kerstens on the Future of Crypto Regulation
Peter Kerstens, consultant of the European Commission and often referred to as the “father of Mica”, recently shared his insights on the future of crypto regulation. Kerstens stated that the Commission is preparing proposals for the SPAR- und Investment Union (SIU), which are expected to contain measures to token traditional financial instruments. This includes tokenizing stocks, bonds, and derivatives, representing them as digital tokens in blockchain networks.
The aim of the SIU is to integrate the fragmented capital markets of Europe and increase cross-border investments, with blockchain technology being used to increase efficiency and transparency. Kerstens emphasized that the focus should be on tokenizing financial instruments, also known as real assets, rather than solely concentrating on improving Mica.
Upgrading the DLT Pilot Regime
As a step to promote tokenization in the European financial markets, Kerstens intends to improve the DLT pilot regime. The pilot, introduced in March 2023, offers a controlled environment for experimenting with tokenized securities, allowing regulatory authorities and institutions to test blockchain applications while maintaining investor protection. The knowledge gained from the pilot will help guide the more comprehensive introduction of tokenized financial instruments and lay the foundation for a future where distributed ledger technology becomes a central component of capital market infrastructure.
For more information on the EU’s shift in crypto regulation and the tokenization of traditional financial assets, visit https://crypto.news/no-mica-2-0-for-now-the-eus-focus-shifts-to-tokenizing-rwas/
