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'Comprehensive analysis' of virtual currencies could prompt EU payments law reform, say MEPs

Out-Law News | 13 May 2016 | 9:53 am | 1 min. read

The European Commission should conduct a "comprehensive analysis" of virtual currencies and determine whether further changes to EU payments laws are necessary, a committee of MEPs has said.

The Committee on Economic and Monetary Affairs at the European Parliament has published its final report on virtual currencies (16-page / 336KB PDF) in which it said virtual currencies and distributed ledger technology more generally can help reduce the cost of transactions and access to finance as well as enhance resilience and speed of payment systems.

However, it said developments in virtual currencies (VCs) and distributed ledger technology (DLT) could merit a rethink over existing payments legislation.

The report said: "The European Parliament … recommends that the Commission draw up a comprehensive analysis of VCs and, on the basis of this assessment, consider, if appropriate, revising the relevant EU legislation on payments, including the Payment Accounts Directive (PAD), the Payment Services Directive (PSD) and the Electronic Money Directive (EMD), in light of the new possibilities afforded by new technological developments including VCs and DLT, with a view to further enhancing competition and lowering transaction costs, including by means of enhanced interoperability and possibly also via the promotion of a universal and non-proprietary electronic wallet."

The final report outlines similar views expressed by the Committee in an earlier draft published earlier this year.

The Committee said a new task force should be set up, consisting of technical and regulatory experts, to "provide the necessary technical and regulatory expertise across the various sectors of pertinent DLT applications, bring together stakeholders and support the relevant public actors at EU and member state level in their efforts to monitor DLT use at the European level and globally".

The task force would also be responsible for identifying the benefits and risks of DLT applications so as to help "make best use of their potential", it said.

The Committee also welcomed Commission plans to make virtual currency exchanges subject to new EU anti-money laundering rules. It said, however, that it expects the proposals to implement that change in the law to be "targeted, justified by means of a full analysis of the risks associated with VCs, and based on a thorough impact assessment".