Eurosystem Gives Approval for New Oversight Framework for Crypto Services

The Eurosystem is the monetary authority of the euro area and has now introduced a new oversight framework for monitoring electronic payments, which includes services concerning crypto assets. The EU is going to introduce regulations relating to stablecoins and cryptocurrencies and the new rules have been designed to complement them. The European Central Bank’s (ECB) Governing Council had public consultations regarding the matter and has now given approval for a new oversight framework for monitoring electronic payments. The Eurosystem published the document, which comprises of the European Central Bank as well as central banks of other member states of the EU that have adopted the common currency in Europe i.e. the euro. 

As per the ECB’s announcement, other regulations would be replaced by the single framework within the existing Eurosystem’s oversight regime related to payment instruments. It also said that this framework would also complement the oversight mechanisms they have in place for the payment systems. It was noted by the bank that the purpose of the framework is to ensure that the current, as well as future payment ecosystem, becomes more efficient and safer. It is part of their efforts of ensuring smooth payments throughout the continent.

The oversight framework of the Eurosystem for electronic payment instruments, arrangements, and schemes is known as ‘Pisa’. It will be used to monitor entities that enable the use of credit transfers, payment cards, e-money transfers, electronic wallets, and direct debits. The framework will be applicable to services that are also linked to crypto assets. This category would include businesses that facilitate the acceptance of digital currencies by merchants through digital wallet providers and card payments, thereby allowing users to receive, send or pay with crypto assets through their products. A member of the Executive Board of the European Central Bank (ECB), Fabio Panetta disclosed that digital payment tokens like stablecoins would also be covered by the Pisa framework. 

He stated that the retail payment system was evolving quickly due to technological change and innovation. This meant that there was a need for a forward-looking approach when it comes to overseeing digital payments solutions. The ECB is urging rapid advancements to ensure global oversight of digital payments. A high-ranking representative of the bank said that they would need to take internationally coordinated action for coping with the challenges that are associated with stablecoins and global digital payment solutions. Companies that fall within the oversight of the Eurosystem would have to comply with the new requirements by November 15th, 2022.

Other entities will be granted a grace period of a year once they are notified about the obligations. All crypto and traditional service providers would be required to file self-assessments and would have to maintain contact with regulatory bodies. The new oversight framework would replace a number of documents that were previously issued by the ECB. This would include the Harmonized oversight approach, along with Oversight framework for credit transfer, card payment and direct debit schemes, Electronic money system security objectives (Emsso), and standards for payment instruments (PI standards).