The European Association of CCP Clearing Houses (EACH) publishes today its response to the European Commission Public Consultation “On an EU framework for markets in crypto-assets”.
EACH acknowledges that technological development contributes for the financial services industry to rethink many of its processes and structures, in order to facilitate clearing and settlement processes. As these technologies advance, and are more widely adopted, they offer a useful means for market participants and market infrastructures to manage their risk. In particular, our response underlines the following:
Need for a single EU classification of digital assets - A clear and distinct categorization of digital-assets between security, payment, utility and hybrid-asset is deemed by EACH of critical importance to determine if a given digital-asset falls under an existing EU regulative framework and to align the existing regulation.
Importance of CCPs’ activities - Although EACH Members recognise the potential positive impact that new technologies such as DLT may have on the CCP business and on financial markets, and are involved in initiatives to encourage the development of such technologies, we believe that the benefits of clearing transactions through a CCP will not become obsolete in the future. Certain functions of the CCP, including multilateral netting as well as the performance of risk, collateral, and default management processes, will indeed remain unique features of central clearing even if the industry moves to a distributed ledger.
Necessity of a gradual regulatory approach - EACH believes that a gradual regulatory approach in the areas of trading, post-trading and asset management concerning security tokens would be not only appropriate but also necessary not to stifle innovation and to carefully monitor DLT as well as security tokens developments at this time.