Digital Currencies Governance Group (DCGG): August Newsletter

European Union

European Securities and Markets Authority (ESMA) Issues a Working Paper on DeFi

On August 1, the European Securities and Markets Authority (ESMA) issued a Working Paper on “Decentralised Finance: A categorisation of smart contracts”. Despite the exclusion of DeFi from the scope of the Markets in Crypto-Assets (MiCA), it is still pressing for EU authorities to gain a deeper understanding of this sector in order to gauge the DeFi-specific benefits and risks and inform future regulatory approaches. This Working Paper in particular outlines a framework for categorising smart contracts within the blockchain environment (without providing policy recommendations at this stage). The paper defines the role of smart contracts, emphasising that their actions are controlled by code rather than human intervention, and outlines the risks associated with smart contracts, such as the inability to modify or terminate them, and categorises them into five groups: financial, operational, token, wallet, and infrastructure smart contracts. The analysis underscores the need for authorities to closely monitor these developments due to their growing integration with traditional finance.

European Commission Welcomes Feedback on European Digital Identity Wallets (EDIWs)

On August 12, the European Commission initiated a public feedback period for five Draft Implementing Regulations concerning the implementation of European Digital Identity Wallets (EDIW). These include four regulations focused on the primary setup of the wallets, addressing aspects such as core functionalities, interoperability, protocols and interfaces, management of personal identification data, and establishing a trust framework for secure communication and information exchange between Member States and the Commission. Additionally, a regulation on national cybersecurity certification schemes is proposed to ensure Wallets' conformity when European schemes are unavailable or insufficient. The feedback period runs until September 9, with adoption expected in Q4 2024.

European Banking Authority (EBA) to Establish a Crypto-Assets Standing Committee in 2025

On August 23, MLex reported that the European Banking Authority (EBA) is planning to establish a new Crypto-Assets Standing Committee (CASC) in January 2025, coinciding with the full implementation of the Markets in Crypto-Assets Regulation (MiCA). This committee will replace the existing Crypto Supervision Coordination Group, which currently facilitates discussions between National and European authorities. The CASC will include members from National Competent Authorities (NCAs) and observers from European Supervisory Authorities (ESAs) like the European Securities and Markets Authority (ESMA). The committee’s mandate is expected to be approved by the EBA's Board of Supervisors in Q3, 2024.

Digital Currencies Governance Group (DCGG) Partners with European Blockchain Convention ; J?rn Jakob R?ber to Moderate at EBC10

The Digital Currencies Governance Group (DCGG) is excited to announce our continued community partnership with the European Blockchain Convention for the second consecutive year. We are proud to have J?rn Jakob R?ber , our Head of EU Policy, serve as a moderator at the 10th European Blockchain Convention. With over 20 years of experience in EU and national policy, particularly in financial services, banking regulation, and crypto assets, J?rn Jakob R?ber will bring his expert insights to this prestigious event.

Panel Title: Will Crypto Payments Be THE Killer Use Case?

Panel Time: September 25, 11:30 - 12:10

We invite you to join us, along with 6,000 attendees and 300 speakers, at the industry’s premier gathering. This year’s convention is poised to be the largest and most impactful yet!

?? Date: September 25-26, 2024 ?? Location: Barcelona, Spain

Take advantage of a 15% discount on your tickets with promo code 15DCGG: https://buytickets.at/europeanblockchainconvention/1103527

United Kingdom

Financial Conduct Authority Publishes an Assessment of Firms’ Compliance with Cryptoasset Financial Promotion Rules and Q2 Financial Promotion Data

On August 7, the Financial Conduct Authority (FCA) published its assessment of how firms are complying with the cryptoasset financial promotion rules introduced in October 2023. The review examined key areas such as personalised risk warnings, the 24-hour cooling-off period, client categorization, and appropriateness assessments. The Financial Conduct Authority 's findings highlighted both good and poor practices, with an emphasis on the need for clear and accurate information to be provided to consumers. The FCA acknowledges the challenges firms face in adapting to these new regulations but stressed that improving compliance is essential. The FCA also noted that firms' adherence to these rules will impact their future authorisation under the forthcoming regulatory regime for cryptoassets.

The FCA also issued a summary of its enforcement actions from April to June 2024, focusing on breaches of financial promotion rules and unregulated activities. During this period, the FCA's interventions led to 3,273 promotions being amended or withdrawn by authorised firms and 528 alerts issued against unauthorised entities.?