EU Investigates Stricter Common Cryptocurrency Rules, Potential $9 Million ICO Fundraising Cap and Mining Ban

The European Union is currently investigating the potential benefits of adopting a set of common rules regarding the distribution and trading of cryptocurrencies and digital assets, with a report calling for stricter disclosure roles set to be considered by EU finance ministers later this week.

The report, prepared by Brussels-based think tank Bruegel for EU finance ministers, will be assessed during cryptocurrency regulation discussions on Friday and Saturday.

Regulation of cryptocurrencies within the EU currently operates on a state basis, with regulators hesitant to implement comprehensive regulation due to a lack of consensus on regulatory action and the relatively small impact of cryptocurrencies on the EU economy.

The growing interest in cryptocurrencies and the potential for fraud presented by cryptocurrencies has alerted EU regulators to the potential risks of fragmented regulatory policy.

Preparatory documents viewed by Reuters state that Austria, which currently holds the rotating EU presidency, is questioning the current cryptocurrency regulatory paradigm within Europe, stating that EU regulations could potentially require modification to address the "Potential risks posed by crypto assets" while still harnessing their full potential.

Stricter cryptocurrency regulation, argues Bruegel, cannot be enforced via an outright ban on digital currencies such as Bitcoin due to their decentralized, virtual nature.

Entities dealing with cryptocurrency instruments such as exchanges could potentially be subject to stricter disclosure rules.

While the Bruegel report that will be assessed by EU finance ministers investigates the potential vectors of regulatory enforcement, it also highlights the need for a nuanced approach to regulation that provides sufficient time "To experiment and learn about the best approaches to this fast-developing [blockchain] technology."

The upcoming EU finance summit in Vienna has been preceded by a recent EU parliamentary discussion focusing on the future of ICO regulation within the EU. The EU parliament All-Party Innovation Group held a meeting on Tuesday, Sept. 4, to assess a proposal submitted by Member of Parliament Ashley Fox that would implement strict new regulations aimed at minimizing fraud within the ICO ecosystem.

The proposal calls for increased Know Your Customer and Anti-Money Laundering requirements for ICOs as well as a limit of 8 million euros for any token-based crowdfunding initiative, proposing that token sales that collect less than this limit should be permitted to raise capital through their platforms using certain cryptocurrencies under a new regulatory model.