European Central Bank Unveils New Electronic Payments Framework

November 23, 2021
The European Central Bank’s governing council has approved a new rulebook for electronic payments, including stablecoins and crypto-assets.

The European Central Bank’s (ECB) governing council has approved a new rulebook for electronic payments, including stablecoins and crypto-assets.

Long have the EU’s institutions expressed anxiety about the impact of stablecoins alongside other crypto-assets.

Not only that but in a year when the likes of Mastercard and Visa have allowed crypto-assets onto their network, there is still a considerable lack of specific regulatory requirements for cryptocurrencies.

This has even triggered companies such as Coinbase and Binance to call for specific regulations.

Now, with the ECB’s new electronic payments framework having been announced, the EU appears very close to answering this request.

“The retail payments ecosystem is evolving fast owing to innovation and technological change. This calls for a forward-looking approach in overseeing digital payment solutions,” said ECB executive board member Fabio Panetta, in a press statement.

Panetta has also taken a lead in the ECB’s CBDC work, having appeared at the European Parliament last week to demonstrate the benefits of a retail CBDC in the EU.

According to Panetta, the ECB’s electronic payment instruments, schemes and arrangements (PISA) framework will include digital payment tokens such as stablecoins, alongside traditional payment instruments and schemes.

“Internationally coordinated action will also have to be stepped up to cope with the challenges posed by global digital payment solutions and stablecoins,” he added.

The new PISA framework replaces the current Eurosystem oversight approach for payment instruments, while also complementing the Eurosystem’s oversight of payment systems.

The Eurosystem will use the new framework to oversee companies enabling or supporting the use of payment cards, credit transfers, direct debits, e-money transfers and digital payment tokens, including electronic wallets.

The PISA framework will also cover crypto-asset-related services, such as the acceptance of crypto-assets by merchants within a card payment scheme and the option to send, receive or pay with crypto-assets via an electronic wallet.

The PISA framework complements the forthcoming Markets in Crypto Assets (MiCA) regulation (including stablecoins), as well as international standards for global stablecoins, and the ECB has said that the Eurosystem also aims to cooperate with other authorities.

MiCA, in particular, provides a political response to the EU’s worries about crypto-assets. Once it has been agreed by the EU’s political institutions, the regulation will introduce much tougher rules for stablecoins than they currently face.

Should it be passed into law with the current proposals intact, stablecoins will need to be authorised by regulatory institutions to be traded within the EU and the authorisation requirement will also apply to stablecoins already in circulation.

Companies that are already subject to Eurosystem oversight are expected to adhere to the principles of the new PISA framework by November 15 next year.

Those companies outside Eurosystem oversight will have a grace period of one year from the moment they are notified that they will be subject to oversight under the new framework, with all companies in scope being invited to submit self-assessments and supporting documentation.

The new rules come hot on the heels of the ECB’s Financial Stability Review last week, which warned that central banks should take advantage of stablecoins current low risk to build up a regulatory framework.

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