The European Banking Authority (EBA) has issued a report to the European Commission identifying actions that should be taken in 2019. The actions are intended to address (1) the risks that unregulated crypto-assets create for consumers and the market, and (2) the risks that crypto-assets regulated on the national level create for the European level playing field.

The EBA is concerned that the fact that crypto-assets do not necessarily fall within the scope of national and supranational financial regulations gives rise to risks with regard to (1) consumer protection, (2) operational resilience and (3) market integrity. Furthermore, legislative and supervisory actions at the national level rise risks for the level playing field.

For these reasons the EBA advises the European Commission to undertake a cost-benefit analysis of whether it is appropriate and feasible that actions are taken on the EU level to address the above-mentioned risks.

Interestingly, the EBA recommends that this analysis goes beyond the impact of crypto-assets in the financial sector and extends to consideration of the environmental impact of blockchain activities more generally.

The EBA further advises that attention is to be paid to the recommendations issued by the Financial Action Task Force on Money Laundering (FATF).

The EBA identifies its internal goals for 2019 as:

(1) Developing a common monitoring template for use by competent authorities to be issued to institutions in order to monitor the level and type of crypto-asset activities;

(2) Assessment of business practices of institutions with regard to (a) crypto-asset advertising, (b) pre-contractual information, and (c) the disclosure of rights and safeguards applicable to consumers;

(3) Reporting to the European Commission on the conclusion of the BCBS’ work with regard to banks’ holdings/exposures to crypto-assets.

(4) Continuation with monitoring of innovation with regard to crypto-assets.