The European Central Bank (ECB) has suggested that the current efforts towards the development of blockchain regulation member states be reinforced.
The recommendation was made in the “ECB contribution to the European Commission’s consultation on Capital Markets Union mid-term review 2017”. The central bank noted that among the recent fintech innovations, distributed ledger technology (DLT) has attracted much interest from financial industry and public authorities.
The ECB pointed out the various measures that should be taken if the market participants consider blockchain adoption. These include:
“(1) bring various aspects of technological innovation within the current legal framework, reconciling them with the basic principles of contract, property and securities law;
(2) explore the legal nature of virtual currencies and digital financial assets in general, and the finality of book-entries and their updates in a distributed ledger;
(3) foster the definition of interoperability standards among novel market infrastructures and with incumbents, across geographies and asset classes; and
(4) understand the implications of technological innovation for incumbent institutions, for the overall architecture of financial markets as we know them today, and for financial supervision and oversight.”
Furthermore, the ECB said that in order to ensure that market participants developing new services and technologies are not limited by different national legislations and unexpected regulatory changes, “the current efforts towards the development of harmonised and principle-based regulation and legislation across Member States be reinforced.”
The bank suggested that the regulation should be designed to be long-lasting. In addition, it should encourage constant interaction with the developers in order to avoid a situation where regulatory changes warranted by specific innovations are overlooked until they are ready for adoption by market participants.
