Crypto Assets – Challenges and opportunities

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Crypto-assets are a digital representation of value or rights which may be transferred and stored electronically, using distributed ledger technology or similar technology (e.g. blockhain). They are neither issued nor guaranteed by a central bank or public authority, and can be used as a means of exchange and/or for investment purposes and/or to access a good or service. A wide range of crypto-assets exist, encompassing different features and functions, hence presenting different challenges and risks.

Crypto assets in their different forms have evolved to meet varying needs for speculative investment, store of value, currency conversion, and payments. The crypto ecosystem continues its rapid growth, presenting both opportunities and challenges. Challenges include operational and financial integrity risks from crypto asset providers, investor protection risks for crypto assets and decentralised finance, inadequate reserves and disclosure for some stablecoins, market manipulation and financial crime isues (involving evasion of taxation, money laundering and terrorism finance, etc.) and also monetary sovereignty.

Many of these risks are not yet systemic, but should be closely monitored given the global implications and the inadequate and fragmented operational and regulatory frameworks in many jurisdictions, and especially in light of the expected further growth of the crypto ecosystem. Certain issues have been addressed through legislative proposals in the EU, which are currently under scrutiny by the co-legislators, but others still need to be tackled.

The information report will build on the conclusions and policy proposals of previous related opinions, and provide an information basis for taking them further and substantiating them. It will thereby provide information about the policy options currently under discussion, take stock of new developments and and develop the basis for proposals to solve remaining problems.