Expanding payment services, improving investor protection or regulating the use of cryptoassets, among the challenges
The composition of the next European Parliament that arises from the elections held between June 6 and 9 and for which more than 360 million European citizens are called to the polls, will have to face up to six regulations that affect the financial industry.
On a general level, the Spanish Association of Fintech and Insurtech (AEFI) has assured that the next legislature of the European Union (EU), which will last for the next five years, will serve to finish adopting regulations that expand payment services, improve investor protection, regulate the use of cryptoassets and adapt the digital operation to the current environment.
Going into detail about the regulations to follow, it is worth noting that the European Commission (EC) is reviewing the current framework and working on proposed changes to the revised Payment Services Directive (PSD3) and the Payment Services Regulation (PSR).
The new package in question seeks to introduce changes in the Union payments sector with the aim of strengthening transaction security and improving user protection and the harmonization of authorization criteria for payment service providers.
Likewise, it is intended to increase competition in the services of open banking and facilitate non-bank providers’ access to payment systems to create a more competitive and transparent market.
In a more guaranteeing section, this new package includes new regulations to make progress in the fight against fraud and establish clearer rules for the liability of payment service providers in case of unauthorized transactions. For its part, another regulation to face, although it is still in its first steps, comes from the digital euro regulation that the Commission and the European Central Bank (ECB) since 2021.
The next phases are the adoption by the European Parliament and the Council of a preliminary position for its negotiation in triloguesalthough there is no consensus at the moment that allows progress in the processing.
However, AEFI maintains that the introduction of the euro digital for retail use could entail major changes in the functioning of the financial system, specifically in the infrastructure and the payment system.
Regarding the MiCA regulationwhich regulates the requirements for cryptoasset providers in the community, begins to apply as of December 30 for new service providers in the cryptoasset market.
However, some member states, such as Spain, will have a transitional period until December 31, 2025 for its entry into force; In the Spanish case, new suppliers must obtain authorization from the National Securities Market Commission (CNMV)as well as being registered by the European Securities and Markets Authority (ESMA).
On the other hand, the EU is currently in the final phases of developing level II of the regulation and the final stretch will occur in the new legislature.
Regarding the DORA regulation (Digital Operational Resilience Act), which was adopted by the EU at the end of 2022 to ensure that financial institutions can resist digital operational threats, will be applicable in all Member States from January 2025.
Other regulations in the European Parliament
Refering to Retail Investment Strategy (RIS, for its acronym in English) designed to protect this type of investors with more modest assets, although the European Parliament had given an initial approval, the process has finally been stalled by the electoral call and it is to be expected that the new composition of the chamber has to build a new consensus around it.
Finally, the SFDR regulationwhich deals with sustainable finance and came into force in 2021, has been in a consultation phase since December last year at the request of the European Commission.
The consultation considers two alternatives: on the one hand, the release of fund classification for managers, so the Commission would move away from the current framework and sustainable investment would be based on the justification of investment strategies and the search for the sustainable financial transformation of companies. On the other hand, the option would be to maintain the current classifications with greater redundancy of minimum criteria to delimit the typologies of funds.
Although the new majorities of MEPs – still to be discerned – can influence the agenda that the new European authorities will establish, from AEFI They predict that the new European Parliament will essentially maintain a continuous line in its activities in the field of financial regulation.
