CERIL

In CERIL Report 2023-3, CERIL finds that, as a result of the complexity of the crypto-market and its rapid evolution, there is a lack of clarity as to whether insolvent crypto-asset service providers, in particular crypto custodians, should be governed by the European Insolvency Regulation Recast (EIR), the EU Single Resolution Mechanism or the EU Winding-up Directive.

CERIL highlights that, as a result of the complexity of the crypto-market and its rapid evolution, there is a lack of clarity as to whether insolvent crypto-asset service providers, in particular crypto custodians, should be governed by the European Insolvency Regulation Recast (EIR) or the EU banking recovery and resolution mechanism.

CERIL’s view is that the EIR’s exclusion in Article 1(2) should be interpreted narrowly, so that crypto-asset service providers such as pure crypto custodians fall within its scope, but recommends that, in light of the introduction of the Markets in Crypto-assets Regulation (MiCAR), the European regulator should undertake a proper assessment of the most appropriate approach. CERIL further recommends that the EIR should be amended for crypto-assets in three ways: first, to include an autonomous definition of ‘crypto-asset’; second, to make it explicit that the lex libri siti applies only to those blockchains subject to the supervision of a public authority; and third, to provide a waterfall mechanism for determining where crypto-assets are situated.

This Statement and Report were prepared by:

Reporters:

• Prof. Paula Moffatt
• Prof. Dominik Skauradszun

Research Associate: Ivi Karra

Download

The CERIL Statement 2023-3 can be downloaded here.

The CERIL Report 2023-3 can be downloaded here.