ECSDA response to the EU Consultation on Crypto-Assets 

ECSDA response to the EU Consultation on Crypto-Assets 

Today, 19 March 2020, the European Central Securities Depositories Association (ECSDA) welcomes the initiative of the European Commission (EC) and wishes to share the views of Central Securities Depositories (CSDs) on this consultation. CSDs share many of the views of the European Commission expressed in the consultation. Our consultation response focusses mainly on tokens other than stablecoins.

In addition to the answers to the consultation questions, ECSDA’s main considerations regarding the consultation are the following:

1. CSDs innovate, including using DLT. ECSDA members have been constantly working on increasing efficiency and finding innovative solutions, while complying with the EU legislation and in constant dialogue with the market stakeholders. Many CSDs are working on innovation projects, including DLT-based solutions, and some are already using DLT as part of their core system or ancillary services in production. CSDs aim at supporting any business models and mature technology that may contribute to an efficient and safe market infrastructure for any type of assets.

2. Current EU legislation (like CSDR, SFD and FCD) is technology-neutral and fit for purpose for investment tokens. It was built for achieving the goal of investor protection and mitigation of systemic risks, not to support a specific technology. It provides for key safeguards enabling stakeholders, such as issuers, intermediaries and other service providers, to operate in a clear environment with limited risk. These safeguards are relevant for servicing any type of assets, disregarding the underlying technology used. Hence, we share the perspective expressed in the consultation that any future legislation should also be technology-neutral.

3. Incorporating crypto-assets not falling under the current regulation into the existing financial regulatory framework, where appropriate, will inject trust and legal certainty, enable their quick adoption, address financial stability, consumer protection and market integrity needs. In the cases where this would not be appropriate (e.g. stablecoins) and, hence, where there may be a bespoke regime (involving a different regulatory framework and/or approach of the authorities), stakeholders, in particular issuers and investors, will gain by being serviced by a trusted entity. It might be considered whether the Principles for Financial Market Infrastructures would provide the right basis for its regulation.

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