Policy Focused Debate

Introduction and Concept

Geopolitical challenges are reshaping how the European Union is approaching its legislative agenda and overall approach to policymaking. While these developments impact all levels of policy formation, the digital assets sector stands out as an area of particularly rapid transformation. The EU has positioned itself as a pioneer in this space, notably following the early adoption of the Markets in Crypto-Assets (MiCA) Regulation. At the same time, the US is taking considerable steps to increase the use of crypto and DLT infrastructure, which places additional pressure on the EU to ensure that its legal framework remains both fit for purpose and competitive.

Against this backdrop, concerns have been raised about the potential financial stability risks posed by US dollar-backed stablecoins. However, the Commission has so far chosen not to revisit the regulatory framework, given that it is still in the early stages of implementation. The Basel Committee’s standard on crypto-assets also remains on the EU’s legislative agenda for implementation early next year. Meanwhile, the EU’s DLT Pilot Regime has taken the form of a sandbox to experiment with this new technology while preserving financial stability on traditional markets. The Commission now faces the task of assessing whether this regime should be extended, amended, or made into permanent regulation.

In parallel, the tokenization market is experiencing a very rapid uptake, with some players already tokenizing traditional assets.

In light of these new challenges, questions have also been raised about the global role of the euro, reflecting ongoing policy discussions across EU institutions and stakeholders. According to the ECB, the digital euro could help increase the profile of the euro by allowing citizens and firms to use central bank money and by fostering more efficient cross-border payments. It could also contribute to greater resilience in the European payments ecosystem. Furthermore, there may be opportunities for the EU to strengthen the euro’s potential as a reserve currency. Finally, in its wholesale form, DLT-based CBDCs hold promise for faster, more efficient cross-border payments and settlement. Nonetheless, discussions on the introduction of the retail digital

euro may prove complex due to its potential impact on the operations of commercial banks, and broader policy considerations.

This roundtable brings together EU policymakers and financial sector representatives to exchange on Europe’s digital assets regulatory framework, challenges and opportunities.

Objectives and main discussion areas

· Explore if the EU’s regulatory framework MiCA addresses new geopolitical challenges in the digital asset space, particularly those posed by US dollar-backed stablecoins.

· Discuss how MiCA and the digital euro retail and wholesale projects address or not emerging geopolitical challenges, and the measures needed to seize emerging opportunities.

· Identify policy tools that may help address current challenges posed by stablecoins or the uptake of tokenization more generally, while also facilitating their development to the benefit of investors and citizens.

· Examine how to balance the EU’s regulatory framework in order to ensure that the crypto-assets market is innovative and competitive.

More info coming soon