Deciphering the European Financial Regulatory Framework of Cryptoassets

Abstract

Similarly to the taxonomy of cryptoassets, their corresponding regulation also varies between jurisdictions. In the E.U., the fact that digital assets were not in the regulator’s mind at time of drafting raises the question of whether they are within the scope and thus subject to European financial regulation. Also, as most European financial legislation is composed by Directives, heterogeneous transpositions are problematic. Therefore, this dissertation proposes to interpret the current regulatory framework for financial instruments in the European Union, namely the Market in Financial Instruments II Directive (MiFID), and, by examining in depth the approach followed by E.U. institutions, courts and authorities, reach a conclusion on whether cryptoassets fall within the scope of E.U. financial regulation. Additionally, a comparison will be made between the E.U. and the U.S. approach to cryptoasset regulation so that a judgement can be made regarding possible future developments in European legislation. To conclude, the challenges that the existing regulation faces when adopted per se to regulate cryptoassets will be exposed as well as the corresponding solutions. In addition, a legal taxonomy will be suggested so that regulators better qualify existing and future digital assets.