EU Transparency Register Identification Number: 78787381113-69 March 2020 EC CONSULTATION ON AN EU FRAMEWORK FOR MARKETS IN CRYPTO-ASSETS General Comments BNP Paribas Group would like to thank the European Commission (EC) for the opportunity to provide its views on an EU framework for markets in crypto-assets. Considering that crypto crypto crypto crypto-assets could assets could assets could assets could have very important implications for the banking and financial sector in terms of potential have very important implications for the banking and financial sector in terms of potential have very important implications for the banking and financial sector in terms of potential have very important implications for the banking and financial sector in terms of potential opportunities and benefits as well as in terms of new risks related, for example, to financial opportunities and benefits as well as in terms of new risks related, for example, to financial opportunities and benefits as well as in terms of new risks related, for example, to financial opportunities and benefits as well as in terms of new risks related, for example, to financial stability, monetary policy o stability, monetary policy o stability, monetary policy o stability, monetary policy or fight against money laundering and financing of terrorist r fight against money laundering and financing of terrorist r fight against money laundering and financing of terrorist r fight against money laundering and financing of terrorist activities activities activities activities, we consider this consultation as an important step in the collective thinking to be conducted in this area and are pleased to provide our preliminary considerations. In general terms, we welcome the Commission's wish to develop a clear legal framework for we welcome the Commission's wish to develop a clear legal framework for we welcome the Commission's wish to develop a clear legal framework for we welcome the Commission's wish to develop a clear legal framework for crypto crypto crypto crypto-assets. assets. assets. assets. Future EU rules will have to provide stakeholders with the legal certainty they need for the development of crypto-assets related activities. In this respect, these EU rules will have to strike the right balance between the search for innovation and the protection of consumers strike the right balance between the search for innovation and the protection of consumers strike the right balance between the search for innovation and the protection of consumers strike the right balance between the search for innovation and the protection of consumers and investors and investors and investors and investors. The adoption of a European regulatory framework should also contribute to EU EU EU EU attractiveness attractiveness attractiveness attractiveness and strengthen its capacity to influen capacity to influen capacity to influen capacity to influence international standards ce international standards ce international standards ce international standards in this area. However, given the fact that both the various types of crypto However, given the fact that both the various types of crypto However, given the fact that both the various types of crypto However, given the fact that both the various types of crypto-assets and the corresponding assets and the corresponding assets and the corresponding assets and the corresponding markets are not stabilized yet, temporary regulatory frameworks might be useful to allow markets are not stabilized yet, temporary regulatory frameworks might be useful to allow markets are not stabilized yet, temporary regulatory frameworks might be useful to allow markets are not stabilized yet, temporary regulatory frameworks might be useful to allow experiments with a sufficient level experiments with a sufficient level experiments with a sufficient level experiments with a sufficient level of flexibility. of flexibility. of flexibility. of flexibility. As suggested by the European Commission, we deem it necessary to develop a European we deem it necessary to develop a European we deem it necessary to develop a European we deem it necessary to develop a European classification of the various types of crypto classification of the various types of crypto classification of the various types of crypto classification of the various types of crypto-assets assets assets assets. Indeed, such a classification would make it possible to define rules adapted to each of the different categories of assets thus defined. The classification, which should be set at the European level, could be based primarily on the crypto- asset’s economic function. This European taxonomy should follow the “same business, same risks, same business, same risks, same business, same risks, same business, same risks, same rules, same sup same rules, same sup same rules, same sup same rules, same supervision ervision ervision ervision” principle. In other terms, if the economic function and purpose of a crypto-asset are the same as a regulated asset class, it should be subject to the same set of financial and prudential rules. Moreover, any entity or intermediary engaging in crypto-assets activities that are equivalent to those performed by regulated financial entities or intermediaries, should be subject to the same legal requirements (in particular with respect to prudential and anti-money laundering issues). To date, the taxonomy proposed by the EC, which distinguishes between “payment”, “investment”, “utility” and “hybrid” tokens, seems relevant, and consistent with the state of the art. These different categories seem broad enough to cover all current cases of use and could be used to define the main legislative principles at level 1, while technical aspects and potential sub-categories of crypto-assets could be addressed by the European supervisory authorities (ESAs) at the second level. Beyond this classification, as rega as rega as rega as regards “regulated” crypto rds “regulated” crypto rds “regulated” crypto rds “regulated” crypto-assets, i.e. those that qualify as assets, i.e. those that qualify as assets, i.e. those that qualify as assets, i.e. those that qualify as “financial instruments” under MiFID II and those qualifying as “e “financial instruments” under MiFID II and those qualifying as “e “financial instruments” under MiFID II and those qualifying as “e “financial instruments” under MiFID II and those qualifying as “e- money” under EMD2, we money” under EMD2, we money” under EMD2, we money” under EMD2, we consider that an adaptation of existing regulations consider that an adaptation of existing regulations consider that an adaptation of existing regulations consider that an adaptation of existing regulations – MiFID, EMIR, CESDR, etc. MiFID, EMIR, CESDR, etc. MiFID, EMIR, CESDR, etc. MiFID, EMIR, CESDR, etc.- would be the would be the would be the would be the right approach, right approach, right approach, right approach, whereas, as regards non whereas, as regards non whereas, as regards non whereas, as regards non-regulated assets, i.e. all the crypto regulated assets, i.e. all the crypto regulated assets, i.e. all the crypto regulated assets, i.e. all the crypto-assets that are assets that are assets that are assets that are not regulated at EU level, the principle of a new bespoke regime, as proposed by the not regulated at EU level, the principle of a new bespoke regime, as proposed by the not regulated at EU level, the principle of a new bespoke regime, as proposed by the not regulated at EU level, the principle of a new bespoke regime, as proposed by the Commission, seems to be necessary Commission, seems to be necessary Commission, seems to be necessary Commission, seems to be necessary. In any case, given that the environment of the crypto-assets