Cryptoassets are digital representations of value or rights, secured by cryptography and distributed ledger technology (DLT). They function as mediums of exchange, stores of value, or utility tokens within decentralised networks. Regulators classify them based on use—payment tokens (e.g., Bitcoin), security tokens (subject to financial laws), and utility tokens (access to services). Key risks include volatility, fraud, and money laundering, prompting frameworks like the EU’s Markets in Crypto-Assets Regulation (MiCA) and the US Securities and Exchange Commission (SEC) oversight guidelines.
AFME supports putting in place a regulatory framework that encourages responsible innovation by regulated financial institutions, including credit institutions and investment firms subject to the Capital Requirements Regulation (CRR). AFME also supports the design of a permanent digital asset exposure framework in the EU. This framework should be technology neutral and should bring these financial activities within the prudential framework where any associated risks will be subject to Basel Standards. These standards ensure robust capital and liquidity regulation, sound risk management and ongoing supervisory oversight. To this end, AFME encourages a suitably conservative and flexible regulatory framework that is appropriately structured and designed.
AFME positions include an appropriate treatment of permissionless networks and grouping of assets aligned with the Basel standard. AFME also advocates for a less restrictive exposure limit and no punitive treatments for infrastructure risks as these risks are sufficiently covered by operational risk requirements.
