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ECB updates oversight of electronic payments

The European Central Bank’s ECB Governing Council has approved a new electronic payments framework that would see cryptocurrencies, stablecoins, and digital payment tokens come within its remit.

A 22 November press release issued by the ECB outlines the new supervisory framework, which  assesses the security and efficiency of electronic payments, and will be applied by the ECB 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 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.

Extension to cryptocurrency

The new single oversight framework for electronic payment instruments, payment schemes and payment arrangements – aka the PISA framework – was approved after a public consultation and also has cryptocurrency payment under its regulatory purview. An excerpt from the press release reads:

“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.”

ECB Executive Board member Fabio Panetta commented: “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.

“The PISA framework will include digital payment tokens such as stablecoins, alongside traditional payment instruments and schemes we have gained experience in over the years. Internationally coordinated action will also have to be stepped up to cope with the challenges posed by global digital payment solutions and stablecoins.”

Companies that already come under the Eurosystem oversight have a deadline of 15 November 2022 to abide by the new PISA framework, while other businesses have one year from when they receive notification about being subject to surveillance under the revamped regulatory structure.

The ECB announcement also said that the new PISA framework complements the expected regulations on cryptocurrency assets and stablecoins proposed by the EU.

The ECB has contended that use of the term “stablecoins” is inappropriate, while Finance Ministers from five EU Member States – Italy, Germany, Spain, France, and the Netherlands – have called on the European Commission to create strict stablecoin regulations.

The ministers argue that stablecoins should not be allowed to operate in the eurozone until they meet regulatory requirements and that regulating the asset-backed tokens will ensure the preservation of the bloc’s monetary sovereignty, protection of consumers, and mitigate risks.

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